HoUinger Corp. 
pH8.5 




Committee on Insular Affairs, 

Wednesday^ February 10, 1901^.. 

The committee met at 10.30 o'clock a. m., Hon. H. A. Cooper in 
the chair. 

STATEMENT OF HON. WILLIAM H. TAFT, SECEETASY OF WAE. 

The Chairman. We are here this morning for the pui-pose of hearing 
Secretary Taf t. , Tliere has been a bill introduced to abolish slavery in 
the Philippine Archipelago and specifically to abrogate the treaty made 
b}'- General Bates. It was under consideration by the committee yes- 
terday, and the committee desire, Mr. Secretary, to hear your views 
upon the measure. 

Secretary Taft. There is no objection to passing this bill at all, except 
that in the Philippine acts slavery has already been abolished. Slavery 
is illegal by the criminal code now in effect in the Philippine Islands, 
and the legislative council of the Moro Province has passed an act, 
approved by the Commission and now in force, making slavery unlaw- 
ful and providing a number of different punishments for various acts 
with reference either to the continuance of slavery and kidnaping. 
The law is here in our report as a Commission. I have discovered 
that the best way to keep anything from the public that pertains to 
the Philippine Islands is to put it in the report. 

There are all the acts passed by the legislative council of the Moro 
Province and among them the act denouncing slavery and kidnaping. 
There is a provision in the Moro Province act of the Commission by 
which slaves may be taken from the persons claiming to own them by 
habeas corpus. 

Now, with reference to disapproval of the Bates treaty. When 
General Wood came out to the Philippines, we had a number of con- 
ferences with respect to the Bates treaty, and we agreed that the thing 
to do was to get it out of the way, and I suggested to General Wood, 
as the governor of the province, that he prepare a report showing in 
how many respects the datos and the sultan had violated the terms of 
the agreement and the conditions which they were to perform in order 
that we might formally declare it at an end. That he has done in a 
report to me as the civil governor of the islands, and I have transmitted 
it to the Secretary of War, recommending that by Executive action, 
because it was a treaty entered into solely by the Executive, it be 
formally abrogated. 

I do not think there is any objection to the passing of either of these 
sections, except that the first section would seem to be a work of 
supererogation in view of the present conditions. If you will abrogate 
the treaty it will relieve us from making a record which will formally 



2 STATEMENT OF HON. WILLIAM H. TAFT, SEORETAEY OF WARA*^ 

justify the Executive who made the treat_y in withdrawing from it. 
Of course it was made necessaril}^ subject to the approval of Congress. 
Congress took no action in respect to it after it was brought to its 
attention, and whether this would be said to be a temporary acqui- 
escence in it or not is a question for you gentlemen to decide. If it 
was a temporary acquiesence, and if, therefore, there may be said to 
have been Congressional approval of the treaty, then it would be 
necessary to have the passage of this section to abrogate it. I do not 
think so. I think that it having been made by the Executive and Con- 
gress taking no action, the Executive would have the right to abro- 
gate it. 

Mr- Patterson. Has the Philippine Commission itself passed any law? 

Secretary Taft. Yes, sir. The Philippine act declares, as j^ou know, 
that slavery shall be unlawful. 

- Mr. Patterson. That is in the Government bill which Congress 
passed last session? 

Secretarj^ Taft. Yes, sir. 

Mr. Patterson. I am speaking of the Commission. 

Secretary Taft. The Commission has taken no action as the legisla- 
tive act of the islands, because slaverj^ is declared to be unlawful under 
the Spanish rule, but the legislative power of the Moro Province given 
by the Commission has passed a special act which has been approved 
by the Commission denouncing slavery and denouncing kidnapping, 
and imposing very severe penalties for those offenses. 

Mr. Patterson. Is it your construction of the Bates agreement that 
it recognized slavery ancl polygamy ? 

Secretary Taft. I never m3^self looked into the history of the 
treaty, but I understood that the original treaty signed by General 
Bates and the Sultan of Sulu contained a recognition of slavery in the 
sense that it provided for its gradual extermination by the bu3dng of 
the slaves, or something of the sort; that it was reported to the Presi- 
dent, and that the President directed the general commanding to notify 
the Sultan that the treaty was approved with the excision of the article 
which referred to slaver}^ and impliedly recognized its existence. That 
is my understanding. 

Mr. Patterson. I think it was a letter from Secretary Root that 
you refer to, in which he said substantiallj^ that. 

Secretary Taft. That is all I recollect about it. 

Mr. Needham. That letter was written by direction of the President ? 

Secretary Taft. Yes, sir. 

Mr. Patterson. The section you refer to in the treaty is that giving 
the slaves the right to purchase their freedom? 

Secretary Taft. Yes, sir. 

Mr. Patterson. When you left the islands, what was your oj)inion 
in regard to the continuance of slavery ? 

Secretary Taft. I have no doubt that slavery continues in part of 
the Moro Province, and that there is some slavery in some of the 
Christian Filipino provinces that lie near to the mountain tribes. This 
latter we are trying hard to eliminate. I had a report from a con- 
stabulary officer from the province of Isabela saying that it was not 
the general custom, but that it was not uncommon for hill tribe parents 
to bring their children into a Filipino village and to sell a child to a 
wealthy man in the village who would use him as a servant. That is 



.1905 
D. ot D, 



STATEMENT OF HON. WILLIAM H. TAFT, SECRETARY OF WAR. O 

contrary to law, and we have directed prosecution in ever}^ case 
brought to our attention. 

Mr. Patterson. Something like a month ago there appeared in the 
Washington Post a statement made by some officer from the Philip- 
pines — I forget his name — that in the Moro Province slavery not only 
existed, but was increasing. 

Secretary Taft. Of course, that is a guess. 

Mr. Patterson. It seemed that he had just returned from the 
islands. 

Secretary Taft. General Wood is using every effort to stamp it out. 
That it will be stamped out to-morrow, or next day, or next year, 1 
can not sa3^ It is a social custom and those things are not easily 
stamped out. Datto Manday, in the province of Zamboanga, has 
directed his followers that slavery is unlawful and must be discontinued. 
Slavery as there conducted is a relation which may continue without 
it being known to the authorities, but laws have been passed, and we 
approved General Wood's action in the matter, although we were not 
quite certain that it was wise to be quite so drastic as he wished to be. 
However, we did approve the law that was passed with some slight 
modification. 

Mr. Patterson. As I understand, there has been no law passed by 
the Commission and no military act whatever that forbids slavery. 

Secretary Taft. You do not understand it correctly at all. I say 
the Commission has approved an act by the legislative council of the 
Moro Province, where slaverj^ prevails, condemning slavery in the 
most unmeasured terms. 

Mr. Patterson. I understand it is condemned. 

Secretary Taft. It provides for the punishment. 

Mr. Patterson. Is that provision of law being carried into effect? 

Secretary Taft. Yes, sir. 

Mr. Patterson. Then, why does not slavery cease? 

Secretary Taft. Why does not adultery cease ? 

Mr. Patterson. 1 think there is a distinction between the two. 

Mr. Crumpacker. The act of the Philippine Commission of June 1, 
1903, creating a civil government for the Moro province in effect 
abrogated the Bates treaty and substituted a new government for it, 
if that had been recognized at all before. 1 notice that act provides 
for a legislative council for the Moro province and makes laws on cer- 
tain subjects, and among others abolishing slavery, and I understand 
that the council has passed a very satisfactory law making slavery 
unlawful and providing for adequate penalt}^, and that the local law 
has been approved by the commission and is being enforced as much 
as it is practicable to enforce a law of the kind under existing con- 
ditions ? 

Secretary Taft. Yes, sir. 

Mr. Crumpacker. And that there is all the legislation that is 
required to provide for the eradication of slavery ? 

Secretary Taft. I think so. There is no objection to piling it up, 
if you desire, but it seems to me that all the legislation is there 
which, if enforced, will accomplish the purpose of the coiiimittee. 

You will observe that paragraph 1, in section 13, makes it the duty 
and puts it within the power of the legislative council to enact laws for 
the abolition of slavery and the suppression of i^lave hunting and slave 
trade. 



4 STATEMENT OF .HOIST. WILLIAM H. TAFT, SECEETAEY OF WAE. 

There is, however, a distinct reference to the agreement among the 
powers and the duties of the legislative asseulbl3^ 

To enact laws for the creation of local governments among the Moros and other non- 
Christian tribes, conforming as nearly as possible to the lawful customs of such peo 
pies, and vesting in their local or tribe I'ulers as nearly as possible the same authority 
over their people as they now exercise, consistent with the act of Congress entitled 
"An act temporarily to provide for the administration of the affairs of civil govern- 
ment in the Philippine Islands, and for other purposes," and following as nearly as 
possible in the provisions of these laws any agreements heretofore made by the 
United States authorities with such local or tribe rulers concerning the power and 
privileges which under American sovereignty they are by such agreements to enjoy: 
Prnrided, That they have not by their conduct and the breach of the agreements for- 
feited such powers and privileges. 

Mr. Crumpacker. That was a reference to the Bates treat}^ ? 

Secretar}^ Taft. Yes, sir. 

Mr. Crumpacker. And that leaves in the local legislative council 
the discretion of determining how far the provisions of existing enact- 
ments might be, or ought to be, respected? 

Secretary Taft. Yes, sir. 

Mr. Patterson. Is it your opinion that the money is still being 
paid the datos under the Bates agreement? 

Secretary Taft. No, sir. I think there was due an allowance in 
October. We turned it over to General Wood, and I do not think he 
has paid it. That is my recollection. If j^ou will refer to the report 
of the Commission, you will find a special report, as an appendix to 
my report as civil governor, from General Wood on the subject of 
the Bates agreement and a reference, I think, to the subject of slaver3^ 

Mr. Patterson. The officer who made the report to which I have 
heretofore referred said the Bates agreement was the cause of all the 
trouble and that as long as that agreement stood the Government was 
not in a position to do away with slavery; that was his idea. . 

Secretary Taft. There is nothing in the Bates agreement that pre- 
vents us from doing away with slavery. There is something in the 
Bates agreement that prevents the passing of land laws and afiiecting 
the title to land and definitely fixing what that is, but there*s nothing 
in the Bates agreement that prevents an interference with slaver3\ 

Mr. Jones. You said that General Wood was taking steps looking 
to the abrogration of the treat}^ ? 

Secretary Taft, Yes, sir. 

Mr. Jones. Do you mean the whole treaty? 

Secretary Taft. Yes, sir; it is an obstacle, there is no doubt about 
it. It is an obstacle to our doing what ought to be done. The Bates 
treaty seems to have been regarded by the military ofiicers there as a 
reason for standing off from the Moros, and if the Moros did not 
attack the United States troops to let them go on as they choose. The 
truth is, there has been anarch}^ in Jolo and the Sultan has not been able 
to maintain authority — maintain the authority which the Bates treaty 
assumed he had — he has been unable to maintain peace and order, and 
the only thing to do is to wipe the treaty out and notify the datos 
that they are to be held responsible. 

Mr. Crumpacker. You have no doubt that the Commission has the 
authority to rescind that authority ? 

Secretary Taft. Certainly not with the authorit}^ of the Secretary 
of War acting for the President. 



STATEMENT OF HON. WILLIAM H. TAFT, SECKETARY OF WAR. 5 

Mr. Patteeson. Let me call you attention to one section of the 

treat3^ 

The rights and dignities of his highness tlie Sultan and his datos shall be fully 
respected; the Moros shall not be interfered with on account of their religion; all 
their religious customs shall be respected, and no one shall be persecuted on account 
of his religion. 

Then in section 10 it provides that any slave may purchase his liberty 
at the market price. 1 have no doubt that those sections stand in the 
way ? 

Secretary Taft. If section 10 was enforced, of course, it does 
interfere with the abolition of slavery because it recognizes it. 

Mr. Patterson. And it would because it treats it as a part of their 
religion ? 

Secretary Taft. I do not follow you in that. By the same reason- 
ing murder would be approved, because a Mohammedan can go out 
and kill a man and pay $100 and so satisfy the Mohammedan law. 

Mr. Patterson. M}^ construction of the treaty has been always 
that in so far as it could it protected the Moros in slavery. 

The Chairman. But this treaty as approved l\y President McKinley 
expressly declared that the authorities here did not accept the clause 
relating to slavery. 

Mr. Patterson. That was a letter from Secretar}^ Root on behalf of 
the President, and he simply said what he was bound to say and what 
we are bound to say, that it could not be recognized in any part of 
the United States under the thirteenth amendment; but this treaty, as 
the Secretary said, has been used in a degree by the military author- 
ities in the Archipelago. 

Do you think the Sultan has acted in a way that it would be proper 
to abrogate the treaty altogether? 

Secretar}^ Taft. I do. 

Mr. Patterson. You do think there is equitable reason why it 
should be abrogated? 

Secretary Taft. Yes, sir; he is a gambler and a tax collector; he is 
nothing else. He has no care of his people. He punishes no crime 
unless it happens to be a charge of crime of a rich man, out of whom 
he can get a good deal of money. 

Mr. Patterson. Do you think that Congress passing this bill we 
have drawn — not in this form necessarily, but substantially, abolishing 
slavery and abrogating this treaty — would have a good effect in eradi- 
cating slavery from the islands? 

Secretary Taft. As the repetition of a declaration? 

Mr. Patterson. There has been no declaration but the treaty 
itself? 

Secretary Taft. No, sir. But the first section, is it anything but 
what was in the Philippine act? 

Mr. Patterson. Except so far as it relates to Porto Rico. 

Mr. Olmsted. In the act of July 1, 1902, an act temporarily to pro- 
vide for the administration of the affairs of civil government in the 
Philippine Islands, we did enact ' ' That neither slavery, nor involuntary 
servitude, except as a punishment for crime whereof the party shall 
have been duly convicted, shall exist in the islands." In view of that 
enactment, with a further enactment in the language of this first sec- 
tion, which is simply a change of the words, namely, "That from and 



6 STATEMENT OF HON. WILLIAM H. TAFT, SECSETARY OF WAR. 

after the passage of this act there shall be neither slavery nor invol- 
untary servitude in the Philippine Archipelago," would this act, if we 
were to pass it now, have any more elS'ect in abolishing slavery than 
the act we have already enacted? 

Secretary Taft, Except by reiteration. 

Mr. Patterson. Do you or do you not think that the second section 
of this bill if enacted to law would help the authorities there to eradi- 
cate slavery in the islands? 

Secretary Taft. It would relieve altogether the necessit}' for Exec- 
utive action. 

The Chairman, Do you think it would precipitate hostilities? 

Secretary Taft. No, sir. So far as the Moro question is concerned, 
the military question is not at all difficult. The Moros are not any- 
where nearly as formidable in warfare as the Christian Filipinos. 
They do not use the guerrilla warfare at all. They get into a fort 
and they shoot over the sides of the fort, and you drop a few shells 
into the fort and the battle is over. Two regiments in Jolo could 
command the islands without the slightest difficulty, and so it is in all 
parts of the Moro country. Of course, it is dangerous to get within 
reaching distance of a Moro, for he has lightning quickness with his 
kris, but as a military problem there is no difficulty at all in keeping 
them in good order. 

The abrogation of the treaty I do not think will lead to any trouble 
at all. I am not prepared to say that the Congressional abrogation of 
it would not be a good thing, that it would not relieve the situation so 
far as the Commission is concerned. There v/ould then be no necessity 
for iustif3dng withdrawal from the treaty, because of course the treaty 
was made subject to Congressional approval. 

The Chairman. Is it your understanding that General Wood would 
like the abrogation of the treaty? 

Secretary Taft. Yes, sir; he is very anxious to have it. We have 
agreed with him that we would abrogate it just as soon as the record 
was made up, but having the contracting power or, so to speak, repre- 
senting the contracting power, we did not want to take action without 
a record. Congress can do that without a record. 

Mr. Olmsted. You propose doing it upon a record independent of 
any act by Congress ? 

Secretary Taft. Yes, sir. 

Mr. Robinson. When will that be accomplished ? 

Secretary Taft. Within the next two or three months. I have not 
had time to bring it to the attention of the President or to examine 
with care and make a statement of the grounds on which the abrogation 
would be had. 

The Chairman. Do 5''ou think that abrogation b}^ Congress would 
have a more salutary effect, a more powerful effect, upon the Moros 
than would abrogation by the Philippine government? 

Secretary Taft. I think it might. 

Mr. KiNKAiD. Is it your judgment that the abrogation by Congress 
of the treaty would in any manner change the legal status as to slavery? 

Secretar}^ Taft. No, sir; not the slightest. 

Mr. Warnock. It would simply relieve a somewhat embarrassing 
situation ? 

Secretary Taft. Yes, sir. 



STATEMENT OF HON. WILLIAM H. TAFT, SECRBTAEY OF WAR. 7 

Mr, Olmsted. But not so much with the slavery as the other 
matters? 

Secretary Taft. Yes, sir; we are not concerned at all in regard to 
slavery. 

The Chaieman. What other matters ? 

Secretary Taft. The payment of the subsidy and the question of 
the authority of the Sultan over the dattos, and of the dattos over 
their people, and of necessarily leaving- to the Sultan and to the dattos 
the administration of justice as between their followers. 

Mr. Patterson. There are practically two sovereignties there now ? 

Secretary Taft. Yes, sir; the sovereignty of the United States 
which the sultans seem to recognize, but there is a sort of a govern- 
ment inside of that carried on, which we ought not to recognize at all, 
or which we ought to control. 

Mr. Robinson. You read a little while ago from an act of the Phil- 
ippine Commission which rather seemed to confirm the rights secured 
by the Bates treaty ? 

Secretary Taft. Yes, sir; the}^ have not been abrogated. 

Mr. Robinson. W hen was that act passed ? 

Secretary Taft. On June 1, 1903. 

Mr. Robinson. Is there any danger of the Philippine Commission 
taking further steps to confirm or recognize that agreement? 

Secretary Taft. Not at all. It was understood when I left the 
Philippines that the treaty should be abrogated by the Executive. I 
am not quite sure whether the recommendation comes in the report to 
the civil governor or to tbe Secretary of War, but in either instance 
it is an appeal to the Executive. 

I must apologize to the committee for our delaj^ in not submitting 
the report before Congress met. It is nov/ brought down to the 23d 
of December, but Governor Wright was ill and Judge Ide was ill, and 
that necessitated the dela}^, and so it was thought better to wait until 
I could come and bring the report, which I did. 

Mr. Williams. Do I understand your conclusion with reference to 
the first section, that as a suggestion from Congress it could do no 
harm and might be of some benefit? 

Secretary Taft. It is a mere repetition of a suggestion contained in 
the Philippine act, and the question of reiteration is a question of taste. 

Mr. Williams. It would show that Congress itself was alive to the 
situation ? 

Secretary Taft. Yes, sir. 

The Chairman, Might it not leave opportunity for someone to say 
to people not well informed on the subject that Congress had hitherto 
neglected its duty? 

Secretary Taft. I do not know. 

Mr. KiNKAiD. Do you not regard it as a question of the exercise of 
authority which already exists in the governing authorities in the 
islands, rather than a" necessitj^ for any more law, that slavery- be 
abolished ? , 

Secretary Taft. Slavery is now abolished so far as law and the 
declaration of law can abolish it. 

Mr. KiNKAiD. And it is a mere matter of enforcement of the law? 

Secretary Taft. Yes, sir; it is not only abolished by the Constitu- 
tion, but it is abolished by Congress and the legislation of the legislative 
council with the approval of the Commission. 



8 STATEMENT OF HON. WILLIAM H. TAFT, SECEETART OF WAE. 

Mr. KiNKAiD. As an experienced jurist and as an experienced execu- 
tive afterwards, is not a mere enactment of law when it is not necessary 
or when it would supplement law already existing" idle superfluity? 

Secretary Taft. I am not a legislator of great experience, but I 
think once is enough for legislation. 

Mr. Olmsted. And it would not strengthen it any if we passed the 
same law year after year for forty years. 

Mr. Jones. All you have said applies to the first section of the bill? 

Secretarj^ Taft. Yes, sir. 

Mr. Jones. You do think it would be well enough for Congress to 
take the initiative as to the second section? 

Secretary Taft. Yes, sir; I do. Certainly there is no objection to 
it, and it would clear away some doubt possibly arising from the fact 
that Congress has not already acted on the matter. 

Mr. Jones. Then you would recommend legislation of that sort? 

Secretary Taft. Yes, sir. 

Mr. KiNKAiD. As to the treatj^, is there any meaning to imply that 
it refers to slavery ? 

Secretary Taft. No; I do not think it does. 

Mr. Jones. You would abrogate the whole treaty ? 

Secretar}^ Taft. Yes, sir. 

Mr. Olmstead. But, as I understand the treaty, as approved by the 
President, it never did authorize slavery ? 

Secretary Taft. No, sir. 

Mr. Crumpacker. In giving that opinion, you considered the fact 
that while it is termed a treaty, it could not in any proper sense be a 
treaty ? 

Secretary Taft. Yes, sir. 

Mr. Crumpacker. It is simply an Executive order? 

Secretary Taft. It is an arrangement for a modus vivendi. 

Mr. Crumpacker. And Congress has never approved it; is not in 
an}^ sense responsible for it. It was an act on the part of the Exe- 
cutive, absolutely and complete!}^ under the control of the Executive. 
Have you considered the policy of Congress in undertaking to inter- 
fere and regulate b}^ legislation matters of that kind that are partic- 
ularly and solely Executive functions? 

Secretarj^ Taft. In that matter, my recollection is that the form of 
the treaty was subject to the approval of Congress. 

Mr. Crumpacker. Yes, sir; but Congress did not approve it and 
the President did. The Executive regarded the approval of (Congress 
as unnecessary because the Executive approved it, and then the 
treaty was respected. 

Secretary Taft. My impression is that the Executive would have 
regarded the treaty as binding until Congress disapproved it, and that 
would make it proper, therefore, if the matter were brought to the 
attention of Congress to approve or disapprove. 

Mr. Patterson. Is the money paid to the datos out of the Philip- 
pine treasur}^ ? 

Secretary Taft. Yes, sir; it is a regular quarterl}^ payment. 

Mr. Patterson. If I should eliminate the first section of the bill 
and change the title so as to read, "A bill to abrogate the treaty of 
August 20, 1899, made and entered into between John C. Bates, 
brigadier -general. United States Volunteers, and the Sultan of Sulu 



STATEMENT OF EON. WILLIAM H. TAFT, SECEETAEY OF WAR. 9 

Archipelago," and then follow with the enactment clause, eliminating- 
the first section, have 3^011 any criticism of the language? 

Secretary Taft. I should think the word "disapproved " might raise 
a question. I think it is a subject for argument, whether the treaty 
when made by General Bates was not a useful arrangement, consider- 
ing the conditions that existed. 

The Chairman. Simpl}^, then, use the word "abrogated?" 

Secretary Taft. Yes, sir. 

Mr. Patterson. Simplj^ have the bill read: 

That from and after the passage of this act the so-called treaty or agreement 
made and entered into between John C. Bates, brigadier-general of United States 
Volunteers, acting for the Government, and the Sultan of Sulu Archipelago and 
the datos whose names appear as parties to said agreement or treaty dated August 
twentieth, eighteen hundred and ninety-nine, be, and the same is hereby, abro- 
gated and disaffirmed and declared void and of no effect. 

Secretary Taft. In order to make it a little clearer I would suggest 
that there be a recital that the agreement was made subject to abroga- 
tion by Congress, as a justification for your action, and also you might 
put in a provision legalizing the payment of money heretofore paid 
under the treaty; that is, that this act shall not effect the payment of 
money heretofore made? 

Mr. Patterson. I suppose not. 

Secretary Taft. I presume that the disaffirmance of the treaty would 
not make such payment illegal while the treaty was in force, but it 
would remove any doubt on the part of the Auditor in settling accounts 
of that sort. 

The Chairman. We have not yet received the report; it is being 
indexed. Can you give us, in a general way, what the Commission has 
suggested as to a revision of the land laws ? 

Secretary Taft. We prepared, in accordance with the direction of 
the Philippine act, rules and regulations for the disposition of the pub- 
lic lands, and that report we sent to the United States in September or 
October. Those regulations go into effect and become law unless Con- 
gress shall amend them. 

The Chairman, At this session? 

Secretary Taft. After the close of this session, that is my under- 
standing, and it was in compliance with that direction that we prepared 
the regulations, 

Mr, Crumpacker. Then legislation is not necessaiy? 

Secretary Taft. No, sir, 

Mr. Crumpacker. But suppose that a joint resolution should be 
adopted approving the regulations? 

Secretary Taft. It would greatly help us. What I mean is that it 
would bring the lands into the market right awa3^ 

Mr. Crumpacker. And put the regulations into operation without 
delay? 

Secretary Taft. Yes, sir. 

Mr, Olmsted. And it would remove any possible cloud from the 
title, so far as legislation goes ? 

Secretary Taft. Yes, sir. 

The Chairman. Mr. Lacey has introduced a bill "To approve the 
rules and regulations of the Philippine Commission, known as 'the 
public land act.' " The committee has been waiting until we could see 
your report. 



10 STATEMENT OF HOISI. WILLIAM H. TAFT, SECEETAEY OF WAR. 

Secretary Taft. I want to say about the land act that the most diffi- 
cult part of the land act to draw was that which defined how far the 
law should go in validating the inchoate Spanish land claims, and in 
framing that we have been exceedingly liberal. Possibly we have 
gone beyond what your construction of the law would justify. We 
have practicall}^ put in as to one class of claims a statute of limitations; 
I think it is ten j^ears. That was because there are a good many 
farmers and planters who have lived on their propert}^ for a long time 
but who were dismayed by the delays in the Spanish land office and 
who never completed their titles, and yet they believe themselves to 
be the owners just as much as if they had fully recorded titles. 
We have thought that it was very wise in such cases to quiet the title. 
State legislation justifies it. For instance, in Tennessee, my recollec- 
tion is that there were conflicting land claims to such an extent that a 
man could put a claim on the statehouse in Nashville and bring a 
suit on it, until finally it got into such confusion that they passed a 
seven years' law. This is a little longer, but General Wright, who is 
from Tennessee and who was familiar with the difficulties of that 
state of affairs, was very anxious to reduce the limitation as much as 
possible and we brought it down to ten years. 

Mr. Crumpacker. Is that a general limitation '*. 

Secretary Taft. No; it only applies to the following-described per- 
sons or their legal successors in right, occupying public lands in the 
Philippine Islands, or claiming to own any such lands, or an interest 
therein, but whose titles to such lands have not been perfected, may 
apply to the court of land registration of the Philippine Islands for 
confirmation of their claims and the issuance of a certificate of title 
therefor, to wit: 

1. All persons who prior to the transfer of sovereignty of Spain to 
the United States had fulfilled all the conditions required by the 
Spanish laws and royal decrees of the Kingdom of Spain for the pur- 
chase of public lands, including the payment of the purchase price, 
but who failed to secure formal convej^ance of title. 

They had paid the money, but it was just through the negligence of 
the officials that they did not get their titles. 

2. All persons who prior to the transfer of sovereignty from Spain 
to the United States, having applied for the purchase of public lands, 
and having secured a survey, auction, and an award or a right to an 
award of such lands, did not receive title therefor through no default 
upon their part. 

That is, where they had applied but had not gotten to the point 
where they were called upon to pay. 

3. All persons who prior to the transfer of sovereignty from Spain 
to the United States, having applied for the purchase of public lands, 
and having secured a survey and award of same, did not, through neg- 
ligence uppn their part, comply with the conditions of full or any 
payment therefor, but who after such survey and award shall have 
occupied , the land adversely, except as prevented by war or force 
majeure, until the taking effect of this act. 

4. All persons who were entitled to apply and did apply for adjust- 
ment or composition of title to lands against the Government under 
the Spanish laws and royal decrees in force prior to the royal decree 
•of February 13, 1891, but who failed to receive title therefor through 
no default upon their part. 



STATEMENT OF HON. WILLIAM II. TAFT, SECRET ARY OF WAR. 11 

5. All persons who were entitled to a gratuitous title to public lands 
by "possessory proceedings" under the provisions of articles 19 and 
20 of the ro3^al decree of the King of Spain, issued February 13, 1891-, 
and who, having complied with all the conditions therein required, 
failed to receive title therefor through no default upon their part. 

Now, I am sure there will be no objection to those clauses, because 
they were drawn with great care and submitted to the chief justice 
and the solicitor-general, the best lawyers in the Philippines, who 
are very familiar with the land laws. 

6. All persons wlio by themselves or their predecessors in interest 
have been in the open, continuous, exclusive, and notorious possession 
and occupation of agricultural public lands, as defined by said act of 
Congress of July 1, 1902, under a bona tide claim of ownership, except 
as against the Government, for a period of ten years next preceding 
the taking effect of this act, except when prevented by war or force 
majeure, shall be conclusively presumed to have performed all the 
conditions essential to a Government grant and to have received the 
same, and shall be entitled to a certiticate of title to such land under 
the provisions of this chapter. 

That practically makes a ten years' limitation. 

The Chairman. Adverse possession for ten years? 

Secretary Taft. Yes, sir. 

The Chairman. One of the most interesting and important provi- 
sions in the civil government act of July 1, 1902, was that relating to 
the friar land purchase. Will you please tell the committee what the 
situation is concerning that subject, and if there is anything we are 
called upon to do? 

Secretary Taft. I think not. The machinery was all provided in 
the Philippine act. We have simply followed out the provisions of 
that act. We went to Rome and procured the consent of the Pope to 
the sale of the lands. He sent a delegate to the islands. In Rome we 
offered to submit the matter to arbitration on the condition that the 
friars should leave the islands, but that condition was not accepted as 
a term of contract. Then we went to the islands, the delegate coming 
in the course of three or four months, and we began negotiations. 
The friar lands were not in the name of the friar orders, with the 
exception of one estate. They had been conveyed to promoting com- 
panies for the p*urpose of sale or management, and so it was when the 
delegate reached there we found that the owners of the lands rather 
objected to his taking part in the negotiations, but that was arranged 
and we took evidence as to the value of the lands, and in the course of 
a year or fourteen months we reached an agreement. 

That agreement was on the basis of a total cost of $7,543,000, but 
there was one estate lying along the Pasig which was very poor in an 
agricultural way, but it was useful for railroad and warehouse pur- 
poses. The Augustinians thought they could sell at a better price 
than we offered them, and they did sell to the railroad a large part — 
the valuable part of it — and we simply left that estate out. It was an 
estate of about 10,000 acres. With that exception and some 2,500 
acres on the hillsides in Laguna, we purchased the whole 420,000 acres 
of agricultural property. The contracts were signed before I left the 
island. The permission given by Congress to issue bonds was pur- 
sued and the bonds were sold at a very low rate of interest — 4 per cent 
on a ten-years basis. I understand thej^ sold for about 3.1 per cent a 



12 STATEMENT OF HON. WILLIAM H. TAFT, SECRETARY OF WAR. 

year. That was occasioned by the exemption provided in the law from 
State, county, and municipal taxation, largely. 

The money is now there to be distributed as soon as the surveys are 
completed and the titles shown to be perfect. I think it is a satisfactory 
solution to everyone. Naturally, the other side thought the price was 
low; they thought the lands were worth between $13,000,000 and 
$14,000,000, but we did not think they were worth so much. The 
first offer we made, with the approval of the President, the Secretary 
of War, and the Commission, was $6,043,000, and the offer was 
increased once by $1,500,000, and the contract was closed on that basis. 
Of course, the total of money to be paid is less by reason of the fact 
of leaving out the yjurchase of the estate to which I have referred. 

It will impose on the government of the islands for ten years a very 
heavy burden of disposing of the lands to the tenants on terms that 
will be satisfactory to them and it will necessitate the organization of 
either a bureau or a division of a bureau that shall have all the work 
it can do, because it is quite likely there will be disputes among the 
tenants as to what their tenancies are and it is quite possible that we 
shall have litigation with many of the tenants as to our ownership of 
the lands, though I think that is not as likely to be as great as I thought 
it was before I left the islands. I have petitions from a good many 
tenants asking that the sale be closed and saying that there will be no 
difficulty about their making longer payments if they could secure the 
fee to the land. 

Mr. Olmsted. Is there any question of claims by the tenants under 
the proposition you have just read under which the}^ could claim title 
by reason of possession ? 

Secretary Taft. Hardly that, because this act was passed in 1892 
and the failure to pay rents did not begin until 1896. 

Mr. Crumpacker. I assume that your policy will be quite liberal 
and magnanimous with tenants? 

Secretary Taft. Yes, sir. 

Mr. Crumpacker. In order to secure the fidelity and friendship of 
the people? 

Secretary Taft. Yes, sir; there is no dispute. It is quite possible. 
General Wright thinks and General Smith thinks — I am not so certain 
myself— it is quite possible that we will lose $1,500,000 or $2,000,000 
in the transfer. 

Mr. Crumpacker. When we gave you the authorit}^ to make the 
negotiations it was my suggestion that 3^ou would lose probably half 
of the money. 

Secretary Taft, It is possible, but the exclusion of the problem from 
the politics of the islands is worth all that money. 

Mr. Williams. How did you ascertain the amount? 

Secretary Taft. We sent what they call a professional surveyor in 
the habit of appraising agricultural land to everyone of the estates 
but two; those two estates were in far distant provinces, one in 
Isabela, and the other in Mindoro; but to the valuable estates near 
Manila and into every estate except those two, and we had a survey 
and a classification of the laiids. Then we called this witness before 
the regularly organized commission consisting of the delegate, the 
four representatives of the lands, and myself. 

The Chairman. The papal delegate ? 



STATEMENT OF HON. WILLIAM H. TAFT, SECRETARY OF WAR. 13 

Secretary Taft. Yes, sir; and that evidence is transmitted in my 
annual report which is somewhere here — I do not know just where. 

Mr. Williams. Does the report furnish a general description of the 
lands — whether timber, in cultivation, etc. ? 

Secretary Taft. Yes, sir; the survey do s. We had surveys of all 
the lands, divided into classifications of first-class rice lands, second- 
class rice lands, third-class rice lands, timber lands, wild lands, and 
town lots. 

Mr. Olmsted. If it is a proper question, to what extent, if at all, 
is the United States bound legally or morally to pay those bonds of 
the Philippines issued for the purchase of those lands? 

Secretary Taft. Not at all; except that Congress authorized the 
issue. I suppose that investors have assumed that that fact would lead 
Congress to assume the ' obligation of them if the Government ever 
became bankrupt. I only know that banking houses are entirely will- 
ing to take the bonds without a guarantee by the Government, and 
the rate at which the bonds sold is an indication that the shadow of the 
United States in the background is very valuable. 

The Chairman. Have you any reason to believe that the Government 
of the United States will ever be called -upon to pay these bonds? 

Secretary Taft. No, sir. 

The Chairman. There is not, in your judgment, any such reason? 

Secretary Taft. No, sir. 

Mr. Crumpacker. In regard to the sale of the certificates for the 
installation of the new currency system, I notice that which was most 
gratifying to me, that those certificates running a year were sold at 
a rate of interest 

Secretary Taft. Less than li per cent. 

Mr. Crumpacker. One and three-eights per cent, I think. 

Secretary Taft. And the second set at about If per cent. 

Mr. Crumpacker. And the money that was received — the proceeds 
from the sale — was deposited in the banks in this country at 3^ per 
cent on daily balances. 

The Chairman. The Government makes money on its own debt. 

Secretary Taft. I do not understand mj^^self how they came to do 
that, except that the Secretary of the Treasury authorized the use of 
those certificates for purposes which national bankers were yerj 
anxious to use them for at that particular time. 

Mr. Crumpacker. I presume that is the reason. 

Secretary Taft. And, as a consequence, they took thena with great 
avidity. When it came to selling our bonds, which were just as good 
security, we had to pay 3.1 per cent. 

Mr. Maddox. How does the new currency system work in the 
Philippines? 

Secretary Taft. It is operating, but we have this difficulty about it 
which we hope we can overcome by tegislation at the proper time. 
The Gresham law that a cheaper currency will drive out a better one 
we encomitered there. The Mexican dollar is worth 10 cents less than 
the Philippine dollar. I do not know that I state it exactly, but for 
purposes of illustration it is sufficient. The great trade of the Philip- 
pines is the export trade in hemp. As long as the people do not know 
the difference between the Philippine dollar and the Mexican dollar 
the English exporters go down in the country and buy hemp and do 



14 STATEMENT OF HON. WILLIAM H. TAFT, SECRETAEY OF WAR. 

not bother themselves with taking the Philippine dollar; they take the 
Mexican dollar. Of course, so far as the retail business in Manila is 
concerned, they have the Philippine dollar, but the Mexican dollar will 
be used as long as the people who sell products or labor do not under- 
stand the difference. It is proposed, I think the Commission has 
already enacted, though I have not seen it — I judge so from the cable — a 
law forbidding the importation of any more Mexicans into the countr3^ 

The tremendous purchase of rice, which, unfortunatel3^ we had to 
make, due to the bad agricultural conditions, worked one good at any 
rate, and that was that it drained the islands of Mexicans. The rice 
came from Saigon, a French settlement across the China Sea. The 
medium was Mexican, and as a consequence there nuist have gone 
out of the islands at least fifteen millions of Mexican dollars. Of 
course that aided us in introducing the Philippine dollar. Now, by the 
prevention of importation of Mexicans, taxing its importation and 
possibly taxing its use and circulation, we can make it so costly for 
those gentlemen who wish to buy cheap with Mexicans and sell dear 
in gold that we may eliminate the Mexican dollar altogether from cir- 
culation, and if we do that then the problem is settled; but it will 
take some years, I suppose, before all the Mexicans can be eliminated. 

Thereupon the committee adjourned. 



Committee on Insular Affairs, 

Monday^ March llj^ 190 1^. 

The committee met at 10.30 o'clock a. m., Hon. Henry A. Cooper 
in the chair. 

The Cpiairman. I will read what Secretary Taft cabled to Governor 
Wright, by order of the President, on March 2, 1904: 

March 2, 1904. 
Wright, Manila: 

By order of the President you are directed to notify Sultan of Sulu and the datos 
who signed the so-called Bates treaty of August 20, 1899, which was a modus vivendi 
and mere executive agreement that in view of the failure on the part of the Sultan 
and the signing datos to discharge the duties and fulfill the conditions imposed upon 
them by said agreement they have forfeited all right to the annuities therein stipu- 
lated to be paid them and to all other considerations moving to them under the 
agreement; that the treat}" is abrogated and held for naught, and that as residents of 
the Moro Province in the Philippine Archipelago they are subject to the laws enacted 
therein under the sovereignty of the United States. Communicate this through 
Leonard Wood, govei-nor of the pro^■ince of Moro, and advise me of his acknowledg- 
ment of receipt and notification to the parties. 

Referring to telegram from this office of the 30th of January, if action has been 
taken under the same it is approved and should be immediately communicated to 
the Sultan of Sulu and the other parties as indicated above. The disturbances in 
the island of Jolo make necessary speedier action than was contemplated in the 
above dispatch. 

Taft. 

Here is the telegram which Secretary Root sent to Governor "V^ right 
on Januaiy 30, 1904: 

January 30, 1904. 
Wright, Manila: 

Recommendation Philippine Commission that Bates agreement with Moros be 
declared no longer in force, upon grounds referred to in report of the civil governor, 
is appi'oved in principle. A statute declaring and containing the legislation neces- 
sary in consequence of this abrogation, and having recitals carefully drawn, should 
be prepared and passed to third reading by Commission and then forwarded to the 
Secretary of War for his approval in advance of its enactment. 

Root. 

STATEMENT OF HON. WILLIAM H. TAFT, SECRETARY OF WAR. 

The Chairman. Mr. Secretary, I wish briefly to ask you about the 
abrogation of the Bates treaty. I have submitted to the committee 
the transcript of two telegrams which were given me at the War 
Department. One, which you signed, is dated March 2, and the other, 
by Secretary Root, is dated January 30, last. 

Secretary Taft. Yes, sir. The disturbances in the island of Jolo 
had become so frequent that after talking with the President I con- 
cluded that we ought to take decided action. Without that action 
subsidies would be due, and the evidence contained in our report shows 
quite conclusively that the Sultan and all the datos were either engaged 
in the disturbances which have taken place there or failed to suppress 

15 



16 STATEMENT OF HON. WILLIAM H. TAFT, SECEETAEY OF WAB. 

them, as was their dut}", and that they violated the terras of the ag-ree- 
ment of the modus vivendi, and therefore it seemed wise to act at 
once. As I have alread}^ said, the action of Congress might have been 
taken with less trouble concerning the facts than w^e were obliged to 
take, because we had to act on the fault of the contracting parties, 
whereas Congress had the power absolutely in its discretion, without . 
reference to what had theretofore happened, to revoke the treaty, but I 
concluded that it was better to be prompt in the matter and the Presi- 
dent agreed with me, so 1 took that action. 

The Chairman. That action had already been recommended b}^ Gen- 
eral Wood ? 

Secretary Taft. Yes, sir. He had recommended it for a long time. 
The truth is that my predecessor. Secretary Koot, took the action which 
the telegram indicated, at my suggestion, just before I came into office. 

The Chairivjan. That was the 30th of January? 

Secretary Taft. Yes, sir; but that invited action by the Commis- 
sion, subject to approval by the Secretary. Whether the action 
M^as taken or not I do not know. I assume it was, but it was so delayed 
in coming by mail that I was not willing to wait until we could receive 
evidence of the action of the Commission, but preferred to assume 
that that action was, as we had agreed it would be before I left, and 
just confirmed that action by cable. 

Mr. Robinson. Do you regard the authoritj^ as ample to abrogate 
this treaty in the manner it was done without Congressional action? 

Secretary Taft. Yes, sir; 1 do, on the conditions which now exist; 
but I hope I have made mj^self clear that I think Congressional action 
might be taken without respect to the facts; but we could onl}^ act 
upon an agreement of that sort upon a statement which satisfied us 
that the terras imposed in it had not been complied with. 

Mr. Crumpacker. You have no doubt that the history of the treaty 
is such as to justify you fully in abrogating the treaty? 

Secretary Taft. Not at all. 

Mr. Crumpacker. And acting upon the facts you had in your pos- 
session you have absolutely abrogated the treaty? 

Secretary Taft. Yes, sir. 

The Chairman. Strictly speaking, that is not a treaty at all? 

Secretar}^ Taft. No; it is an executive agreement. I termed it in 
the telegram a modus vivendi. I can refer the committee to the evi- 
dence contained in this report [indicating]. This is a report which 
was gathered together for me at the Department, and I will leave it 
with the committee. 

Mr. Patterson. That was an exhibit to the Commission's report? 

Secretary Taft. Yes, sir. 

Mr. Patterson. It was not embraced in the report at the time it 
was printed ? 

Secretary Taft. Not at the time it was printed. 

I ought to add, possibly, that we had a telegram to-day from General 
Wade saying that he had received a telegram from General Wood 
announcing that the Moros in the Catabato Province, owing to the 
announcement of the antislavery law, had sent out an armed force, 
which had been met and had been defeated. I confess I am disappointed, 
because I supposed that the Moros of the Eio Grande del Mindanao 
lying east and north of Catabato were in a condition where that sort 
of thing was not possible, but the announcement to-day shows it is. 



STATEMENT OF HON. WILLIAM H. TAFT, SECRETARY OF WAR. 17 

* 

There was no loss of Americans, but a considerable loss among the 
Moros and the capture of a number of what they call lantakas — small 
cannon that they use in the forts. 

The Chairman. That originated because of the promulgation of the 
antislavery proclamation ? 

Secretary Taft. Yes, sir; so the dispatch states. 

The Chairman. That would indicate, would it not, that they pro- 
posed to fight to retain slavery ? 

* Secretary Taft. Yes, sir; at least some part of them. The Moros 
are not united, so it does not do to infer from what one tribe will do 
what another will do. 

This [indicating] Exhibit T, on page 489 of the report of the Com- 
mission, contains the report of General Wood as to the abrogation of 
the Bates treaty, and it contains a copy of what has transpired at Jolo. 

Mr. Patterson. Since you were before the committee, I have intr^o- 
duced, on February 10, the bill, with the first section omitted, which 
is a bill simply to abrogate the treaty entered into between General 
Bates and the Sultan on the 20th of August, 1899. As I understand 
your testimony given before, you stated to the committee that you 
thought Congressional action on this subject was, if not necessary, at 
least a matter about which Congress could very properly legislate, and 
that you gave it as your opinion that the situation there could be better 
controlled by legislation by Congress than by any action on the part 
of the Commission, and suggested that this bill should be amended to 
cover the Bates treaty alone, taking the position that the question of 
slavery was covered by the Constitution and the government Philip- 
pine bill which we passed last term. 

Secretary Taft. That is correct, I think. 

Mr. Patterson. Do you still adhere to your opinion, since you have 
issued the executive order, that it would be wise in Congress now to 
pass this bill referring only to the treaty? 

Secretary Taft. It certainly will confirm our action, and it will cer- 
tainly take from our action any question of rightfulness. 

Mr. Patterson. As the fact was, this treaty or agreement was for- 
warded to Congress with a statement that it was subject to the approval 
or disapproval of Congress? 

Secretary Taft. Yes, sir. 

Mr. Patterson. Congress has neither approved nor disapproved; 
and, as 1 further understand, legislation has always been had in the 
Philippine Islands with reference to what is called the Bates agree- 
ment. Is that statement correct? 

Secretary Taft. Yes, sir. 

Mr. Patterson. And that the authorities there have gone upon the 
idea, as 1 understand, that so long as Congress took no affirmative 
action in regard to this treaty, it either could not do so or it was not 
advisable to do so, and all legislation has been with reference to that 
agreement ? 

Secretary Taft. All legislation with reference to the Moros has 
assumed the existence of the Bates treaty, because every appropriation 
bill which has been passed has appropriated the money due under the 
Bates treaty, thus recognizing the subsidies. I think I read in the 
Moro province act when I was here before a general reference to the 
existence of treaties, not specifying the Bates treaty, which could how- 
ever, only have reference to the Bates treaty. 

I A— 04 2 



18 STATEMENT OF HON. WILLIAM H. TAFT, SECRETARY OF WAR. 

# 

Mr. Patterson. Without referring to that now, the statement by the 
Commissioners in the islands and wherever they went referred to the 
Bates agreement as a living agreement? 

Secretary Taft. Yes, sir. 

Mr. Patterson. As 1 understand you to say this morning your 
action as an executive has been based solely upon the fact that the 
Moros themselves have violated the terms of this treaty? 

Secretar}^ Taft. Yes, sir. 

Mr. Patterson. And that you have justified your telegram upon 
that alone? 

Secretary Taft. Yes, sir. 

Mr. Patterson. Whereas you say that Congress, irrespective of 
whether they have abrogated the treaty, could properly pass a law 
abrogating the treaty upon the moral question involved ? 

Secretary Taft. What moral question ? 

Mr. Patterson. The question of protecting polygamy and the pay- 
ment of subsidies. 

Secretary Taft. I do not admit that the Bates agreement recognizes 
polygamy. 

Mr. Patterson. Perhaps I am unfortunate in my statement. 

Secretary Taft. I think you are. If you go back to the Bates 
treaty, I do not admit at all that the Bates treaty recognizes polygamy 
or slaver}^ 

Mr. Patterson. I think there is a difference of opinion; I think it 
does. 

Secretary Taft. Not necessarily. 

Mr. Patterson. The question 1 was arriving at was this: There are 
other matters in the treaty except the question of slavery? 

Secretary Taft. There is nothing in the treaty about slavery. 

Mr. Patterson. Yes, there is. 

Secretary Taft. No; excuse me. 

Mr. Robinson. There is article 10. 

Secretary Taft. Article 10 is no part of the treaty. 

Mr. Patterson. Why? 

Secretary Taft. Because it was eliminated by the only person who 
could consent to it. 

Mr. Patterson. Not in terms? 

Secretary Taft. Yes, sir. 

Mr. Lanning. In express terms? 

Secretary Taft. Yes, sir; by President McKinley. 

Mr. Patterson. But that would have been done anyhow by ^he 
Constitution ? 

Secretary Taft. But it was done by the President. It was also 
eliminated from the treaty which was presented to the President for 
his approval. 

Mr. Williams. Did the other parties know that? 

Secretary Taft. That was communicated to them. 

Mr. Patterson. That rather takes me off of the line which I will 
not pursue very far. Slavery has existed there from that time to now 
without interference on the part, practically, of the United States 
Government? 

Secretary Taft. I would not say that. 1 have been over frequently 
just what has happened. Whenever slaves have presented themselves 
for freedom they were freed. They have not gone to war on the sub- 



STATEMENT OF HON. WILLIAM H. TAFT, SECRETARY OF WAR. 19 

ject of slavery, if that is what you mean, and slavery has not been 
destroyed by force of arms of the United States. 

Mr. Patterson. Secretar}^ Root says in his report here that he 
thought slavery was still existing, and that is the report of the Com- 
mission, that the slave trade has been carried on. 

Secretary Taft. Not with the consent of the United States. Slave 
trade has been suppressed just as far as the soldiers were able to sup- 
press it. 

Mr. Patterson. But with or without the consent of the United 
States it has been going on. 

The Chairman. Mr. Secretary, please indicate on the map the ter- 
ritory to which the Bates agreement or modus vivendi applies. 

Mr. Patterson. 1 want to ask just one more question. This treaty 
protected the Sultan in certain rights to territory, as I understand it; 
that is, within certain limits his jurisdiction was to be practically 
supreme ? 

Secretary Taft. If you will read the treaty it preserves those rights 
which he had. Now, the question of what rights he had was left open 
to be determined. 

Mr. Patterson. Whatever rights he claimed? 

Secretary Taft. Not whatever rights he claimed, because he claimed 
a great deal that he did not have. 

Mr. Patterson. But whatever rights he had he was protected in ? 

Secretary Taft. Whatever property rights he had he was protected in. 

Mr. Patterson. And the pearl fisheries were also mentioned in the 
agreement ? 

Secretary Taft. Yes, sir; just what the limit of his rights over 
the pearl fisheries was, I am unable to say. They are a constant 
source of dispute between him and the datos and between the citizens 
of the islands and the Sultan. The Sultan got all he could out of it. 

Mr. Patterson. I will ask you this question without regard to the 
appropriateness of any Congressional legislation. Do you think any 
question coiild arise on this telegram you sent abrogating this treaty, 
so far as the pearl fisheries or the rights of the Sultan are concerned, 
that he might have held or claim to hold under the Spanish Govern- 
ment? 

Secretary Taft. I think not. . I think we should recognize the same 
rights whether the treaty was enforced or not, if he had them. You 
will find a law among the laws of the Commission, passed at the sug- 
gestion of Secretary Root, about a year and a half ago, in which all 
grants of the Sultan made without the authority of either the Crown 
of Spain or the United States Government were declared to be void. 
So his rights remain just as they were, whatever they may prove to be, 
unaffected by the treaty, because the treaty itself never guaranteed to 
him anything but the rights which he had, leaving for future decision 
what those rights were. I am speaking now of property rights. 

Mr. Patterson. By Congressional legislation would not the situa- 
tion there in the Moro Province be clear to this extent; that is, the 
military authorities would have the approval of Congress to take pos- 
session of those islands as strictly American territor^^ and treat them 
as such? 

Secretary Taft. I am not prepared to say that the action of Congress 
is not more authorit}^ than the action of the Executive, because, of 
course, Congress has control of all the property of the United States, 



20 STATEMENT OF HON. WILLIAM H. TAFT, SECEETAEY OF WAR. 

but the islands passed to the United States by the treat}^ of Paris, and 
their disposition is, of course, with Congress, subject to such Executive 
regulation and control as their immediate government requires. That 
is all. Now, my own impression is that there is no doubt but that the 
abrogation of this treaty by the Executive will end it, but it would 
make assurance doubly sure if the Congress itself acted. That is all I 
have to say. I think that practically it is not necessar3% and that 
theoreticall}^ it makes it stronger. 

Mr. Williams. I understood your statement to be that you were 
seeking to terminate this agreement on the ground that the Sultan vio- 
lated the provisions of the treatj'^ 

Secretary Taft. Yes, sir. 

Mr. Williams. How do you determine that fact — that is a question 
of fact? How is that determined in order to act? 

Secretar}^ Taft. We determine it simply by looking at the evidence 
of his acts or failure to act. 

Mr. Williams. Is it the evidence taken by the United States repre- 
sentatives alone? 

Secretaiy Taft. Yes, sir. 

Mr. Williams. Then it is an ex parte matter ? 

Secretary Taft. Yes, sir, it is; just as the termination of any con- 
tract b}^ the declaration of either party on the ground of violation of 
the other must be ex parte until a court shall decide it. 

Mr. Williams. That being true, do you not think that the action of 
Congress upon this question would give less rooifi for any criticism or 
any objection than to leave it to the Executive Department? 

Secretaiy Taft. Yes, sir; I think so. In the one case the power of 
Congress is absolute and can not be questioned, and in the other 
case it is a question of fact. 

Mr. Williams. And that fact may be disputed? 

Secretaiy Taft. Yes, sir. 

Mr. Crumpackee. Do you mean to say that the Moros will resist 
the power of Congress covering the order of the Secretaiy of War in 
the cancellation of this agreement? 

Secretaiy Taft. I think they will, because I do not think they will 
make any distinction. What I mean to say is that the one ends it 
absolutely, and the other makes it a question of fact. 

Mr. Crumpacker. For campaign purposes we might be justified in 
passing this resolution, abrogating the treat}^ on the one hand, provided 
it does not provoke a Philippine and Moro war in the House and in 
the Senate in its passage to the President for approval ? 

Secretaiy Taft. Having been absent from the country four years I 
am not an expert on what makes campaign literature. 

Mr. Crumpacker. I think some of us know. 

Mr. Lanning. As I understand it, the Philippine Commission has 
been advised to pass an act repealing the provisions of the act passed 
by them concerning the Moro Province ? 

Secretaiy Taft. Yes, sir. 

Mr. Lanning. Relating to the Bates treaty ? 

Secretaiy Taft. Yes, sir. 

Mr. Lanning. If the Philippine Commission abrogates the treaty 
and at a later date Congress should abrogate the treaty the status of 
the subsidies between the two dates might be a question of discussion, 
and would it not, if Congress does anything, be wiser for Congress to 



STATEMENT OF HON. WILLIAM H. TAFT, SECEETAHY OF WAE. 21 

confirm the action of the Commission rather than to pass an act which 
in itself in haec verba abrogates it? 

Secretary Taft. I am not prepared to answer tliat question. Of 
course, Congress may abrogate the treaty absolutely without regard to 
the reasons which actuated the Executive in abrogating it. Neverthe- 
less, I think Congress might abrogate the treaty as of the date prob- 
ably that the Executive abrogated it, confirming that action without 
basing it on the reasons the Executive had for the action. 

The Chairman. Would that not be an advisable thing to do, to con- 
firm the action of the Executive? 

Secretary Taft. I think it might be. 

Mr. Lanning. The Commission has not acted so far as I am advised. 

Secretary Taft. No; but I have acted for the President. Whether 
the Commission acts or not, the part}^ to the contract was the Presi- 
dent, who acted through General Bates. I understand the law to be 
that the Secretary of War, indeed every Cabinet ofiicer in the Depart- 
ment, acts for the President, and that his acts are the acts of the Presi- 
dent, and certainly this action was taken with the concurrence of the 
President. 

Mr. Lanning. Is it not true, in your judgment, that if the Philip- 
pine Commission should pass an act abrogating this treaty at one date, 
and Congress should pass another act abrogating the treaty at a later 
date it might leave the status of the subsidies between the two dates 
a question of dispute ? 

Secretary Taft. It might be an intimation that the first act did not 
abrogate the treat}^, and that there was no ground for it. 

Mr. Lanning. Precisely. 

Mr. Degetau. I desire to know if their was any treaty in existence 
between Spain and the Sultan at the time the Philippine Commission 
took charge of the government of the islands relating to those matters. 
I think under the terms of the treaty of Paris they had those rights, 
of which the Sultan speaks, and that some legal question might arise. 

Secretarj^ Taft. I think I have seen some memorandums between 
the governor of Jolo and the Sultan, but my recollection is that there 
was nothing in the treaties that defined the rights of the Sultan in 
such a way as to prevent a complete transfer of sovereignty. There 
was a treaty between Spain, England, and Germany with reference to 
certain parts of the Jolo Archipelago and Paragua that seemed to per- 
mit the free entry of goods. That, if literally enforced, might be 
embarrassing, but I think that treaty has become obsolete; certainly 
we have never recognized it. 

Mr. Patterson. The rights of the pearl fisheries have always been 
controlled by the Sultan? 

Secretary Taft. Subject to certain rights of the datos, and how far 
those were I fancy it is almost impossible to determine. There will 
have to be some kind of an investigating tribunal sent there to deter- 
mine that. 

Mr. Patterson. Are the pearl fisheries valuable? 

Secretary Taft. I think they are fairly so; there is no great wealth 
in them. The Chinamen are the men who control the pearl industry. 
They are the persons who take leases from the Sultan ordinarily or 
from the dato in the neighborhood. The difliculty there has been, and 
that is one reason why the treaty should have been abrogated some 
time ago, relating to all these rights. The Army has been modest 



22 STATEMENT OF HON. WILLIAM H. TAFT, SECRETARY OF WAR. 

and restrained about interfering- and it was the most powerful dato in 
the neighborhood who usually exercised his authoritj^ and let some- 
body" go in and fish, and there was nothing but the right of force that 
absolutely controlled. 

The Chairman, There is no possible way, is there, in which the 
making of the Bates 'agreement in the first instance or its abrogation 
now, either by the military power or by Congress, could in any way 
afi'ect the pearl-fishery rights or any other rights of the datos or Sultan 
under any treaty the}^ had with Spain ? 

Secretary Taft. No, sir. 

The Chairman. Will you kindlj^ indicate on the map, for the benefit 
of some of the new members of the committee, who possibly may not 
be entirel}^ familiar with this subject, what5'ou understand b}^ the Jolo 
group and where slavery exists, which the Sultan and datos propose 
to perpetuate -how much of the whole archipelago? 

Secretary Taft. The Jolo group is beneath this line [indicating on 
map], above is the island of Mindanao [indicating on map], and here 
[indicating on map] is the island of Basilan, and then over on this side 
[indicating on map], outside this group, is the island of Paragua. 
The Sultan of Jolo has claimed that he had rights in the island of 
Paragua from the middle of the island down, and he has leased to 
Prince Poniatowski, represented by Ledochowski, two promoters in 
California, for fifty years, the southern half of this island [indicating 
on map]. We have never recognized it. We passed a law, at the 
direction of the Secretary of War, declaring all such grants void 
because they were made without the consent of anybod}^ 

The Chairman. Were those alleged grantors American citizens? 

Secretary Taft. I am not sure whether Prince Poinatowski is a 
Russian or an American, but my impression is that he is an American. 

The Chairman. They are not Filipinos at all? 

Secretar}^ Taft. No, sir. They were represented by a New York 
lawyer by the name of Mr. John R. Dos Passos. 

The institution of slavery prevails in this neighborhood [indicating]. 

The Chairman. That is in the southwestern part of Mindanao ? 

Secretary Taft. Yes, sir. Slavery prevails wherever there are 
Moros. The Moros are divided into four general classes, what are 
called the River Moros. This [indicating on map] is the Rio del Min- 
danao. It runs down here to Cotabato, and then there are the Lake 
Lanao Moros, where most of the fighting has been done. Lake Lanao 
Moros were never conquered by Spain. This is [indicating on map] 
where General Baldwin and subsequently Captain Pershing established 
garrisons, first at Camp Vickers on one side, and another camp, whose 
name I have forg-otten, on this side [indicating on map]. This lake is 
3,000 feet high. They have constructed a military road from here 
[indicating on map], Ilagua, to the lake at this point, and there is a very 
good trail or road from Camp Vickers on this side [indicating] down 
to Malaban on this side. The Zamboanga Moros, under Dato Mandy, 
have abolished slaver5^ Then there are the Jolo Moros, under the Sultan 
and a number of other datos, including those within the Tawi-tawi 
group. There are a few others, perhaps 1,500, in the southern part of 
Paragua. 

Mr. Robinson. How many Moros are there altogether? 

Secretary Taft. Before the census was taken the number was greatly 
exaggerated. I should be surprised if tlie number exceeded 400,000 in 



STATEMENT OF HON. WILLIAM "K. TAFT, SECRETARY OF WAR. 23 

the entire Archipelago. It had been supposed previously that they 
reached 1,600,000. The census, however, 1 am bound to say with 
respect to the Moros, was not taken with anything- like the accuracy 
that the census of the Christian Filipinos was taken. 

Mr. Patterson. What proportion of the Moros are slaves? 

Secretary Taft. I am unable to answer that question, except to say 
that whenever there has been talk of buying the slaves they almost all 
become slaves. With respect to the actual number, 1 can not asij. It 
would be a guess if I were to say 25 per cent. The Moros violate the 
rule of the Koran, as I understand, by enslaving their own people. 
The Koran permits the slavery of other people, but not of Mohamme- 
dans. A very poor tribe in this neighborhood [indicating on map 
south of Cotabato in Mindanao] has been the subject of kidnaping, 
and it is in this neighborhood that the army has had to station guards 
to protect a very poorly fed and poorl}^ living tribe from which the 
Moros have heretofore gotten many of their slaves. They come up 
[indicating on map] from Jolo, and then take them back. 

The Chairman. Mr. Secretarj^, will you kindly listen to a substitute 
resolution which Judge Crumpacker proposes? 

Secretary Taft. Certainly. 

Mr. Crumpacker. My suggestion is to strike out all after the enact- 
ing clause and insert: 

That the action of the President and Secretary of War, taken on the 2d day of 
March, 1904, unquahfiedly abrogating the agreement entered intb between Brig. 
Gen. John C. Bates and the Sultan and certain datos of the Suki Archipelago, on the 
20th day of August, 1899, and commonly known as the Bates' treaty, is hereby 
confirmed. 

Secretary Taft. That meets the situation. 

Mr. Williams. I understand you to say, and I suppose that is true, 
that the action taken by the Department is based on what it considered 
a violation of the terms of the agreement, and that, so far as our action 
should go, simplj^ to ratif}^ that action without going bej^ond that. If 
we limit our confirmation simply to the action jou have taken, our 
action would also be based on the supposition that the terms of the 
Bates agreement had been violated? 

Secretary Taft. I should question that. 

Mr. Williams. If we simply ratify what you have done? 

Secretary Taft. By ratifjang and abrogating it I should think that 
you ratify it on every ground that you might summon. 

Mr. Williams. But I understand we are simply ratifying what has 
been done by the Executive Department ? 

Secretar}^ Taft. Suppose we had abrogated it without stating an}^ 
reason and then you would confirm it, would not your confirmation 
derive additional strength from the fact that you had the power, 
although we did not have it? 

Mr. Williams. But you have stated reasons ? 

Secretary Taft. Yes, sir. 

Mr. Williams. If we are going to abrogate it we should limit our 
action to the mere supposition that the terms of the agreement had' 
been violated. 

Secretary Taft. I do not know how far the confirming applies. 

Mr, Jones. Do you think that we confirm all the statements of fact 
that are set forth in General Wood's report and the reasons? If we 
do that, we just simply say that we have examined this action on the 



24 STATEMENT OF HON. WILLIAM H. TAFT, SECEETARY OF WAR. 

part of the Government in the Philippine Islands, and we ratify and 
confirm it, everything in reference to it, instead of taking independ- 
ent action, as we have the right to do. 

Secretarj^ Taft. That method of stating it is not without force, and 
I should like to think that over. I would like to see whether the abro- 
gation could not be so framed as to leave no reason for misconstruction. 

Mr. Jones. If Congress has the absolute power to do it, why should 
we not exercise that right; why should we predicate our action upon 
what has been done by the Philippine government, ratif3dng and con- 
firming the action which it has taken in order to get an excuse? 

Secretary Taft. There is good reason for its action. 

The Chairman. Now, Mr. Secretary, we will be glad to have you 
take up the sections of the bill relating to railroads. 

Secretary Taft. May 1 take up the entire bill ? 

The Chairman. Yes, sir. 

Secretary Taft. The first section of this bill provides that all bonds 
issued by the government of the Philippine Islands, or by its author- 
ity, shall be exempt from taxation by the Government of the United 
States, or b}^ the government of the Philippine Islands, or by any 
State, county, municipality, or other municipal subdivision of the 
States and Territories of the Union and the District of Columbia. 
All the bonds that have heretofore been issued b}^ the Philippine 
government have had the benefit of that exemption. Those bonds are 
the bonds which were issued for the purpose of maintaining the parity 
"between the Philippine currency and the United States currency; that 
is, between the Philippine peso and 60 cents in gold. They include two 
issues of $3,000,000 each, the authority being in the coinage act to 
issue $10,000,000. They also include what are called the friar-land 
bonds, of which $7,000,000 have been issued and sold. 

The bonds, or as they are called in the coinage act, certificates of 
indebtedness, for the purpose of maintaining the parity were sold at 
a rate heretofore unheard of in the markets of the world. The first 
$3,000,000 were 4 per cent bonds that ran for one year, and they were 
sold at a premium of more than 2.5 per cent, making the interest 
which was paid for that year's use of $3,000,000 less than 1.5 per 
cent. The next $3,000,000 were issued at a rate which was somewhat 
higher. I think it was 1.75 per cent. Then when the friar-land 
bonds came to be issued they were issued as 10-30 bonds — that is, redeem- 
able after ten years and payable within thirty years. They sold at a 
premium which made the interest, calculated as ten-year bonds, to 
be 3.1 per cent. 

Now, the reason for these low interest rates in the certificates of 
indebtedness was twofold; one was that the certificates of indebted- 
ness were free from local taxation, and the other ;wa8 that the Secre- 
tary of the Treasury agreed to receive them as securities for deposits in 
national banks; and at the particular time when they were issued there 
was a great demand for securities for deposit of that sort. The nor- 
mal rate of interest is much more clearly shown in the sale of the 
friar-land bonds, which enjoyed the same privilege of exemption from 
local taxation and were also to be received for deposits, but at that 
time the financial situation seemed to have been better and there was 
not the call for securities of that sort, and so the rate of interest became, 
as I say, 3.1 per cent. 

Under existing legislation there is authority to issue $4,000,000 of 



STATEMENT OB^ HON. WILLIAM H. TAE^T, SECRETAKY OF WAR. 25 

bonds for the city of Manila to build a water supply and to build a 
sewerag-e system, both of which are indespensible to the proper hj^gienic 
conditions in that city, but those bonds are by law made exempt only 
from United States Government taxation and from Philippine govern- 
ment taxation. They are still subject to taxation b}^ cities, counties, 
and municipalities in the United States. We asked, as these bonds were 
issued for substantially the same purpose, to wit, to carry out the pur- 
poses of the United States in aiding the Philppine Islands to be rehabili- 
tated in modern methods of government, that they be aided by the 
same exemption. The exemption really does not work to the disad- 
vantage of anybod}^^ for this reason, that if the bonds are issued sub- 
ject to taxation they will be taken by persons who will not return them 
for taxation at all and no taxes will be realized out of them. 

Then the question may be put, Why will they not then sell as well 
as if thej'^ were exempt? The reason why the}^ will not sell as well is 
that there are certain bidders for bonds whose assets have to be shown 
to the public, who can not avoid the tax collector when he comes 
around to levy taxes on personal property. These are administrators, 
executors, trust companies, and various banking firms, and insurance 
companies that purchase this kind of a bond because it is exempt from 
taxation. Therefore it seems advisable to give us the benefit of that 
exemption for all the bonds which 3^ou authorize the issue of, in an 
experiment which is certaini}^ a Federal experiment and in an agency 
which is certainly a Federal Government agenc}^, clearly within your 
constitutional rights and where you are pursuing a policy that works 
no injury to anj^one. 

Mr. Jones. You assume, Mr. Secretary, that the parties who buy 
the bonds would not pay taxes on them ? 

Secretary Taft. I assume it with a knowledge of facts that 1 think 
can not be contradicted. 1 come from Cincinnati and I do not think 
Cincinnati is less dishonest than any other city in the Union so far as 
taxes are concerned. You can sell 4 per cent county bonds in Cincin- 
nati at certainly 1 per cent premium to the banks, and the Ijanks dis- 
pose of those bonds at 1 per cent premiun. The taxes on these bonds, 
if the bonds were returned for taxation, would be 2.5 per cent. You 
examine the personal-tax returns of Cincinnati and you will not see a 
single count}^ bond, and yet that county has absorbed them. 

Mr. Jones. And you think the great insurance companies would do 
the same thing? 

Secretary Taft. They can not, because they have to "show their 
hand," so to speak. 

Mr. Jones. I understand that is the class of people who would buy 
them. 

Secretary Taft. If you have the exemption the insurance companies 
will buy them. 

Mr. Jones. And if not, they will not buy them ? 

Secretary Taft. If you do not have exemption, the insurance com- 
panies will not buy them because they have to " show their hand." I do 
not mean to say that they are more honest. What I mean is that 
those companies and those people who have to show to the public the 
kind of property that they have by reason of some statutory require- 
ment want this kind of a bond. 

Mr. Crumpacker. I want to ask you a question on the first section. 
I believe with you on the policy of making these bonds all nontaxable. 



26 STATEMENT OF HON. WILLI A.M H. TAFT, SECRETARY OF WAR. 

Are there or may there be any political subdivisions of the Philippine 
Archipelago that have the power of taxing property within their limits ? 
There is no provision, I notice, that prevents any political subdivision 
in the Philippine Archipelago from imposing taxes. 

Secretary Taft. This has been the form, and j^ou can reasonablj^ 
count on the Commission never authorizing anybody to tax their own 
bonds. If you desire to make it certain, you could insert "by the 
government of the Philippine Islands or anj^ subdepartraent thereof." 
All the bonds you have heretofore authorized are bonds which can only 
be issued by authority of the Commission. 

Mr. Crumpacker. Yes; that is true. 

Secretary Taft. And they can authorize the cities to issue bonds. 

Mr. Crumpacker. But an amendment had better go in so as to 
make the matter absolutel}^ without their power, "government of the 
Philippine Islands, or by any political or municipal subdivision of said 
Islands." 

Secretary Taft. The second section of the bill is the section which 
gives to the Commission of the Philippine Islands the power to issue 
not exceeding 110,000,000 of bonds for the purpose of internal improve- 
ment. Heretofore the Philippine Islands have never issued bonds for 
the purpose of internal improvement; but there have been, as I have 
already said, two issues of bonds; but I do not think it is fair to call 
those a burden upon the credit of the islands, because the assets for 
the payment of the bonds appear in the laws which authorized their 
issue. For instance, the two issues of bonds were, jiirst, the issue of 
certificates of indebtedness under the coinage act. The coinage act 
authorized the issue of $10,000,000 of certificates of indebtedness to 
maintain the parity between the Philippine peso and 50 cents in gold! 
It is specifically provided that the money shall be used for nothing else. 

The Philippine Commission has established what is called the gold- 
standard fund, and in that gold-standard fund it has incorporated the 
proceeds of these certificates and what is called the seigniorage — that 
is, the money made coining a peso worth 50 cents in gold out of silver 
that is worth only 40 cents, and that leaves to the government a profit 
of about 10 cents. The total profit thus far in the Philippine Islands 
out of the change in the coinage by seigniorage amounts to about 
$1,500,000. That makes the gold-standard fund now consist of the 
$6,000,000, which were the certificates of indebtedness issued in order 
that we might have a fund to inspire confidence in our ability to main- 
tain the parity and also that we might have a continuing credit with 
which we might buy bullion, because the law specifies that $3,000,000 
of the $10,000,000 could be used for that purpose, and we have that 
money now on deposit in the banks under a contract that whenever we 
have more than $3,000,000 on hand we shall receive 3.5 per cent inter- 
est on daily balances. So I do not think it is fair to sa}^ that that 
$10,000,000 is a burden in the sense in which an issue of bonds for 
public improvements which must be paid ultimatel}^ out of income is a 
burden. 

Second, there are the friar lands, ^ It is quite possible, though I 
hope not, that we shall have made, so far as money considerations go, 
a poor bargain in the purchase. M}^ own hope is that at the end of 
ten years it will appear that we shall come out whole, but in any event 
we have by law secured as the basis for the issue of those bonds 



STATEMENT OF HOIST. WILLIAM H. TAFT, SECRETARY OF WAR. 27 

400,000 acres of the best land in the Philippines, to devote the pro- 
ceeds of to the payment of those bonds. 

We have authorit}^ to issue $4,000,000 of bonds for the construction 
of a water supply and the construction of a sewerage sj^stem in the 
city of Manila, which bonds are made specifically a charge upon the 
income of the city of Manila, and the tax roll in the city of Manila 
amounts to about $45,000,000. 

Mr. Lanning. Assessable values ? 

Secretary Taft. Yes, sir. In Ohio we call it the tax duplicate. 
The total assessable values for taxation amount to about $45,000,000. 
That is the present condition in the Philippine Islands. 

We have spent out of our income upward of $5,000,000 for improve- 
ments already, for the port works in Manila, for the construction of a 
road to Benguet, for the construction of various other important work 
in the islands. I am unable to give the various works which we have 
undertaken in the way of buildings and roads, except to sa.j that the 
total is something over $5,000,000. In addition to that we have to 
pay over $600,000 for the taking of the census which Congress 
imposed on us. I am not complaining of it. Congress was generous 
enough to allow us to save about half the expense of the census by 
doing the tabular work in the Census Bureau of the United States, 
but that $600,000, I think you will agree, was an extraordinary 
expense. Then we have spent, or have appropriated — and I prefer 
to use the word "appropriated," because I tJiink that mortgages the 
income in a sense — $500,000 for the exhibit at St. Louis. Then the 
cholera has imposed on us a very large additional expense, estimated 
variously from $500,000 to $600,000. 

We have received from the Government of the United States about 
$3,000,000 to aid us because of the distressed agricultural conditions. 
Of that money we have spent something like $1,200,000. The rest of 
it is mortgaged for the construction, as the law itself provided it rnight 
be, of roads and other public improvements, but what we are anxious 
to do now is to go ahead, for instance, with our port works in Manila, 
upon which $2,000,000 have already been expended and which will 
probably cost before we finish, $4,000,000. 1 am afraid that with the 
falling off of the revenue which has been taken in the last six months 
we may find it necessary to stop some of our public work. I have a 
telegram from Governor Wright in which he asks that authority be 
given for the issuance of $5,000,000 of bonds. If we can not get 
$10,000,000, we will be glad to have $5,000,000, though $10,000,000 
would be a much more permanent fund. 

Thereupon, the committee adjourned to meet Wednesday, March 16, 
at 10.30 o'clock a. m. 



Committee on Insular Affairs, 

March 16, 1901^. \ 

Hon. Henry A. Cooper, chairman, presiding. 

t 

STATEMENT OF HON. WILLIAM H. TAFT, SECRETARY OF WAR— 

Continued, 

The Chairman. Mr. Secretary, we will resume consideration of the 
bill. 

Secretary Taft. I was looking, at the time we adjourned, for a tele- 
gram from Governor Wright, on the subject of the issuing of bonds 
for public improvements, and have it here right under my hand now. 

The Chairman. That was on section 2 % 

Secretary Taft. Yes, sir; on section 2. I will read as follows: 

Referring to change of plan for harbor improvements, Manila, involving increased 
outlay about $800,000, which you and I favored, and which was laid before the Com- 
mission, latter of opinion that our finances do not warrant increased outlay. Our 
customs receipts for past six months have fallen off nearly 25 per cent. While we 
hope this is due to temporary conditions, under the circumstances, do not feel it safe 
to make large appropriations for permanent improvement. Same remarks apply to 
harbors Iloilo and Cebu, to Benguet railroad, and perhaps other needed public works. 

It would relieve us much if you could get Congress to give the Commission authority 
to issue bonds for, say, not exceeding $10,000,000, for works of public improvements. 

And it is upon this telegram that I ventured to put in the bill the 
provision allowing the issue of $10,000,000, limiting its use for public 
improvements. 

Mr. Crumpacker. In view of the fact that it is proposed to make 
these bonds absolutely nontaxable and make them payable in gold, 
and so on, do you believe it is necessary to fix the rate of interest as 
high as 5 per cent? 

Secretary Taft. I do not know that it is. I think we could float 
them at 4 per cent. 

Mr. Crumpacker. Do you think the 4 per cent limit would be 
entirely safe? 

Secretary Taft. Yes, sir. We have heretofore floated them at 4. 

Mr. Crumpacker. None of j^our bonds cost ^^o^x 4 per cent, do they ? 

Secretary Taft. No, sir; The last issue cost 3.01 but we were afraid, 
in view of the condition of the money market at the time, to float them 
at 3i per cent, because the law requires that they should be floated 
at par. 

The Chairman. What did the coinage bonds sell at ? 

Secretary Taft. They went so low it was 1.5 and 1.7 per cent. But 
there were peculiar conditions prevailing. 

Mr. Crumpacker. Can you approximate the aggregate value of 
taxable property in the islands ? 

Secretary Taft. No, sir; I can not. I could only give you what 
the property in Manila is worth and I can state to you generally what 

29 



30 STATEMENT OF HON. WILLIAM H. TAFT, SECRETAHY OF WAK. 

the income from duties is. That is about $10,000,000 a year. Then 
from Manila and other sources the collection into the insular treasury- 
is likely to be about $2,000,000 more. Then provincial collections and 
municipal collections run up the income to three or four millions more 

Mr. Crumpacker. The fact, however, of the policy of development 
that you hope to extend will be to largely increased valuations? 

Secretary Taft. Oh, yes, sir; a largely increased income. If we 
can induce^Congress next year to make the trade free or to reduce it 
to 10 or 16 per cent, or 25 even, of the Dingley rates, I think we can 
show an income that will be very largely increased. 

Mr. Warxock. I think you said at the last meeting, on Monday, 
the practical valuation of property in Manila — real and personal — was 
about $45,000,000? 

Secretary Taft. Not personal; there is no tax on personal property. 

Mr. Olmsted. In what degree would the bonds proposed to be 
issued be lower in security than those recently issued in regard to the 
friars' land. 

Secretary Taft. Nothing; except that these would be dependent 
wholly on the income on the islands, whereas, under the law, the lands 
of the friars are themselves reserved as a source for a sinking fund 
with which to pay friars' lands' bonds. 

Mr. Olmsted. But those bonds now sell at 1.09 and 1.11; have you 
any doubt that these bonds would sell on a 4 per cent basis? 

Secretary Taft. No, sir; I have not. Of course, I say I have no 
doubt. When you are seeking authority it is more comfortable to get 
a little leeway, but personally I feel confident that we could iioat them 
at par at 4 per cent. 

Mr. Olmsted. You figue in view of their freedom from taxation? 

Secretary Taft. Yes, sir. 

Mr. EoBiNSON. I assume from the $10,000,000 for the work men- 
tioned that this is to be a continuing project; and could you estimate 
reasonably what the total sum of the completion of this class of work 
under this project would be in the next number of years? 

Secretary Taft. I could not, sir, at all. I could not give any esti- 
mate. If you make it $5,000,000 you have only provided for half the 
time, and if you desire to make it $5,000,000 I would not interpose a 
serious objection, though it would increase the necessity for coming 
to Congress again. M}^ own conception of the duty of the Commission 
and duty of the government in those islands is to continually improve 
them by the construction of bridges, roads (which may be termed 
insular roads, as distinguished from mere local road branches), and 
large schoolhouses and port works. The islands are practically with- 
out any improvements at all, and I do not think it possible to carry on 
works of improvement of that sort without borrowing money. You 
can create sinking funds, and there ought to be created sinking funds, 
but, nevertheless, it is necessary to have the money, and it is not fair 
to impose the burden of all the improvements on the present tax-paying 
generation. I think it fairer to distribute it through twentj^or thirty 
years than to impose it on the people who are paying the_ taxes to-day. 

Mr. EoBiNSON. A reasonable carr3dng out of this policy for which 
it is proposed to appropriate $10,000,000 would within the next num- 
ber of years (possibly not so long) necessitate an appropriation of 
from forty to fifty millions of dollars, would it not, for the same 
projects and purposes? 



STATEMENT OF HON. WILLIAM H. TAFT, SECEETARY OF WAR. 31 

Secretary Taft. It is verj^ difficult for me to answer that. I should 
think you might count on the expenditure of |2, 500, 000; perhaps we 
could spend that much a year; I am not sure. I think we have spent 
that much a year out of the current income. You could calculate 
then what that would amount to. That would amount to $25,000,000 
in ten years, would it not? 

Mr. Crumpacker. You hope that you will be able to carry on part 
of this improvement b}^ current income? 

Secretary Taft. Yes, sir; I do. 

Mr. Crumpacker. And you do not contemplate the issue of bonds 
for the entire improvement? 

Secretary Taft. No, sir. We have had heretofore a 'surplus, but I 
think that surplus is disappearing now; and what we wish it for is 
merely (and I am willing to reduce the application to 15,000,000 if the 
committee would prefer) to have something to which we can look in 
case the income fails us. 

Mr. Williams. Mr. Secretary, are the $10,000,000 asked for based 
upon any estimate as to the amount that should be used for each par- 
ticular class in which you propose to engage? 

Secretary Taft, No, sir. 

Mr. Williams. It is just a gross sum? 

Secretary Taft. That is all. 

Mr. Williams. Without any estimate? 

Secretary Taft. That is all. 

Mr. Robinson. Your repair charge for highwaj^s each year is almost 
equal to the original cost of construction, is it not, in the islands, and 
would the current expenses of the islands more than bear the deterio- 
ration ? 

Secretary Taft. The repair charges are very heavy, indeed. The 
torrential rains tear the roads up in a way that is most discour- 
aging. 1 do not think thej^ are quite equal to the cost of construction, 
but we hope to make the provinces bear more or less of that; but I do 
not think they can be expected to bear the repair charges on the trunk 
lines, if I may use that expression. That will have to come out 

Mr. Robinson. Would the current expenses of the islands be more 
than sufficient, then, to bear all repairs and charges? 

Secretary Taft. I think they would, if we get the legislation we 
wish. 

Mr. Williams. Would the railroads be subject to the same disturb- 
ances in the islands? 

Secretary Taft. No, sir. I talked with General Wood and General 
Davis on that subject. They have had a good deal of experience. 
The maintenance of railroads is cheaper than the maintenance of high- 
ways, because the effect of the rain on the railroad is by no means so 
severe as it is on the highway. 

The Chairman. Mr. Secretary, we will consider the next section. 

Mr. Warnock. From this provision that the President of the United 
States, with the Secretary of War, shall approve these bonds, it is a 
moral obligation on the part of the United States to see that they are 
paid? 

Secretary Taft. No, sir; I do not think so — no moral obligation 
other than in the sense that if Congress authorizes some subordinate 
body to issue bonds it is not likely to allow loans made by the subordi- 
nate body under its authority to go to protest; that is all. And I 



32 STATEMENT OF HON. WILLIAM H. TAFT, SECRETARY OF WAE. 

suppose you can not avoid the effect of that, even though you were to 
declare that you were not liable. There is no legal obligation on the 
part of the Government of the United States to pay these bonds. 
You confer authority on the Philippine government to issue them and 
on the Philippine government to pay them, but you assume for the 
Government of the United States no legal obligation. 

Mr. Warnock. No complication would arise over that? 

Secretary Taft, No, sir. This action by the President or Secretarj" 
of War is really a provision that is superfluous, because no legal act 
of the Commission can take effect without the approval of the Secre- 
tary of War, under existing law. I think that section ought to .be 
changed, and it ought to be limited either to the President of the 
United States or to the Secretary of War, because if the Secretary of 
War approves it is the act of the President of the United States, and 
if the President approves, the Secretary of War can not very well 
disapprove. 

Mr. Crumpaoker. If the President approves it is practically true it 
is on the Secretarj^ of War's advice. 

Secretary Taft. Yes, sir. I think one of those could be just as well 
stricken out. 

Mr. Lanning. Mr. Secretary, is there any power now vested in the 
Philippine Commission to authorize any indebtedness to be created, by 
bond or otherwise, for municipal or local improvements? 

Secretary Taft. Yes, sir. I think I explained yesterday that the 
Commission has the power to issue bonds and charge their payment 
upon the income of the city of Manila to the extent of $4,000,000 for 
sewerage and water supply. 

The Chairman. That is under the act of 1902? 

Secretary Taft. Yes, sir. Then there is a section that provides that 
the Philippine Commission may authorize a municipality to issue bonds, 
the total amount of which shall not exceed 5 per cent of the assessed 
value of property for taxation in the town, with the consent of the 
Secretary of War, the President of the United States, and the Congress 
of the United States. 

Mr. Lanning. Have there been ^nj bonds issued of that character? 

Secretaiy Taft. No, sir. 

Mr. Lanning. Have there been an}^ bonds for the building of sew- 
ers, etc., in Manila? 

Secretary Taft. No, sir; but that may be considered as if it had 
been done for the reason that plans have been matur-ed for both the 
sewage and the increase of the water supply, and there is sitting in 
Manila to-day a board of engineers, the presiding member of which is 
Mr. Desmond Fitzgerald, of Boston, to determine the feasibilit}'^ of 
the plans prepared, and as soon as that is settled by this board of 
engineers bonds will be issued and work begun, because it is of very 
great importance to the city. 

Mr. Lanning. Are those bonds — that is, the bonds that are issued 
under the four million limitation — required to be approved by either 
the President or the Secretary of War? 

Secretary Taft. My impression is that they are. As a matter of 
general law they would have to be. 

Mr. Lanning. Then I understand the entire bonded indebtedness of 
the Philippine government, whether it be issued in the form proposed by 
the bill now pending before us or whether the bonded indebtedness be 



STATEMENT OF HON. WILLIAM H. TAFT, SECRETAKY OF WAR. 83 

authorized by the Philippine Commission for local improvements, there 
is a record of that entire bonded indebtedness here in Washington? 

Secretary Taft. Yes, sir. They are all let here, as a matter of fact. 
The bonds are sold in this country and they are sold through the 
Bureau of Insular Affairs, but no bond would be legal the issue of 
which had not been approved by the Secretary of War. 

Mr. Patterson. Can the Philippine government issue these bonds 
without the authorization of Congress? 

Secretarj^ Taft. That is a question of construction of the Philippine 
act. The doctrine expressio unius est exclusio alterius would limit 
the legislative powers which are conferred upon the Philippine gov- 
ernment so as to prevent the issue of bonds, because there are certain 
sections that authorize expressly the issue of bonds. Were they not 
in the bill I should think the language was wide enough to authorize 
the Philippine government to issue bonds and borrow money, though 
it would be by no means free from doubt; and I am sure the Philippine 
Commission would never exercise the power, especially for the reason 
that if there is the slightest doubt about the power to issue bon^s, then 
you have to pay 1, or 2, or 3 per cent in order to cover the risk 
involved in the construction of the law. 

The Chairman. Mr. Secretary, permit me to say right there, in 
reply to Judge Lanning, that the bonds which the city of Manila is 
authorized to issue require first the approval of the President of the 
United States. 

Secretary Taft. I had forgotten the exact language. 

The Chairman. The consent of the President of the United Statos 
has to be first obtained. (Sec. 7, act of 1902.) 

Secretary Taft. I would like to call 5'^our attention, Mr. Chairman, 
to that section. I think 3^011 will find the section does not exempt those 
bonds except from United States and Philippine taxation. It does not 
give the exemption which the friars' bonds have and which the first 
section of this proposed act would give them. That is one reason 
why it is important we should get this act through, if we can get it 
through, before the issue of those bonds, so that we may get the bene- 
fit of the reduced interest that would follow the attribute of exemption 
of taxation. 

Mr. Crumpacker. The purpose of section 3 of the bill before us, 
Mr. Secretary, is to amend section 6Q, that we eliminate the require- 
ment that Congress shall approve the bonds ? 

Secretary Taft. Yes, sir. 

Mr, Crumpacker. And to increase the limitation of aggregate 
indebtedness in various municipalities from 5 to 10 per cent? 

Secretaiy Taft. Yes, sir. I do not press that increase from 5 to 10 
per cent, although it is a very low limit. 

Mr. Robinson. Under the Harrison act for the Territories it is only 
4 per cent. 

Secretary Taft. I am not familiar with that. 

Mr. PoBiNSON. That was passed in 1888, and it has been the ruling 
factor in all legislation for all Territories. The limitation is 4 per 
cent. 

Mr. Crumpacker. The conditions in the Territories are different 
from those in the Philippine Islands. 

Secretary Taft. 1 do not press that, Mr. Chairman — the increase 
from 5 per cent to 10 per cent — if the committee are doubtful about it 



34 STATEMENT OF HON, WILLIAM H. TAFT, SECEETAEY OF WAR, 

at all, but what we wanted to do was to make this section workable. 
Now, there are 900 towns, and in many of them the water supply is 
essential to the health; I mean an improved water supply is essential 
to the health of the towns. If we could have driven wells and a small 
water system, we could probably reduce the death rate by 50 or even 
75 per cent, and it was with a view to making this workable, because 
we should hardly like, and it does not seem feasible, to apply to Con- 
gress for the right to borrow a thousand dollars nor two thousand dol- 
lars for one town and five hundred dollars for another town and so on. 
If we could have the privilege of borrowing money for each of the 
900 towns to put them into good hygienic condition, it would accom- 
plish wonders for the islands. We might, of course, go to work and 
make a report to Congress and have Congress authorize the issue of 
so many bonds for so many towns, and if the committee thinks that 
that is the wisest course, well and good. 

The Chairman. I infer from what you say that impure water is the 
great cause for disease. 

Secretary Taft. Yes, sir; it is. 

The Chairman. You think driven wells 

Secretary Taft. I think driven wells would accomplish wonders. 
Water is the cause of amoebic dj^sentery. It is the cause of a great 
many bowel troubles. During the cholera season it makes life in the 
countr}^ almost inevitably attended with very great danger from the 
epidemic. 

Mr. Lanning. Mr. Secretary, in view of your varied and extensive 
judicial experience, may I ask you a question that has just struck me? 
Of course it is very important that the legislation authorizing the issue 
of bonds shall be unassailable from any Constitutional standpoint. 
Now, let me call your attention to section QQ, as proposed to be 
amended, I suppose the same as in the present act, however 

Secretary Taft. Yes, sir. 

Mr. Lanning. You will observe that the Philippine Commission and 
the President and the Secretary of War are together made a legislative 
body — that is my construction of it — to authorize the issue of bonds. 
Is there any objection to associating the President and the Secretary 
of War with the Philippine Commission, as it is here done, in view of 
the constitutional provision that .legislative functions can not be dele- 
gated to the executive branch ? 

Secretary Taft. I think not. The government of the Philippine 
Islands, by virtue of the fundamental statutes that create it, includes 
the Secretary of War, and therefore includes the President, as a part 
of the legislature of those islands, because, under the instructions 
issued by President McKinley to the Secretary of War, he makes pro- 
vision that nothing which the Philippine Commission shall do shall 
have validity unless approved by the Secretary of War. 

Now, those instructions are carried into Congressional legislation by 
the Philippine act of July 1 — I think it was 1902. So that under the 
present law nothing can be done by the Philippine government as a 
government in the way of legislation, unless it includes either the 
express or tacit approval of the Secretary of War, representing the 
President. So that if you were to leave out ',' with the consent and 
approval of the President and Secretar}^ of War," it would still be 
necessary under the statute which constitutes the government to have 



STATEMENT OF HON. WILLIAM H. TAFT, SECEETARY OF WAE. 35 

the consent of the Secretary of War. Were you to sa3% "The Philip- 
pine Commission under such limitation, terms, and conditions as may 
be described, with the consent of the Secretary of War," j^ou would 
be reciting- what the Philippine government now is; but I think the 
expression "the government of the Philippine Islands" was inserted 
to include not onl}^ the present Philippine Commission, but any sub- 
sequent government that might be substituted for it. 

Mr. Olmsted. Your suggestion in the preceding section about the 
necessity for inserting "the President and Secretary of War'' would 
apply also here? 

Secretar}^ Taft. I think the expression might verv well leave out 
one or the other of them. 

Mr, Lanning. Wouldn't it be wiser to say "with the consent of the 
Secretary of War" than to associate the President, who is the head of 
the executive branch of the Government, with a purely legislative 
function ? 

Secretary Taft. Do you think it is so clearly established that the 
President has not legislative power? 

Mr. Crumpacker. He has the veto power, 

Mr. Lanning. I suppose there is a sense in which we may say the 
President is associated with legislative functions as to all acts passed 
by Congress. He approves them or vetoes them. At the same time, 
lawyers are familiar with that class of cases in the Supreme Court 
here where the distinction is drawn between those acts that the Presi- 
dent may do and those that he uiny not do in view of this constitutional 
provision that we have in mind. 1 do not know at all if any question 
of that sort would be raised here. 

Secretary Taft. I think it is very wise to eliminate one or the other, 
because it gives the impression that President and Secretaiy of War 
are to constitute a board. 

Mr. Crumpacker. Don't you believe, Judge Lanning, that along 
the line of your thought it would be better to leave the power of 
approval with the President in view of the fact that the Constitution 
of the United States vests in him the power of approval of all legisla- 
tion by Congress? 

Mr. Olmsted. The act constituting the Philippine government 
already provides for the Secretary of War, whether we name him here 
or not. Am I not right? 

Secretar}^ Taft. Yes, sir. 

Mr. Lanning. I would say, if this were original legislation I would 
be inclined to agree with your suggestion. Judge Crumpacker, but 
you are amending this section, you must remember, in the original, 
and if you substitute the approval of the President only, for the 
language we now have, you are changing in quite a material respect 
the existing law and the law as it has heretofore been followed. 

Secretary Taft. The section has never been acted upon. There 
has been no precedent established. 

Mr. Crumpacker. The original section included both the President 
and the Secretary of War, and Congress in the bargain. We are try- 
ing to eliminate Congress; that is all. 

Secretary Taft. You might eliminate the President at the same time. 

The Chairman. The original section had ' ' the consent and approval 
of the President and Congress. " The Secretary of War is not men- 
tioned in it. 



36 STATEMENT OF HON.. WILLIAM H. TAFT, SECRETAEY OF WAR. 

Mr. Lanning. Now, what is the constitutional provision that refers 
to the approval of Congressional acts b^^ the President? 

The Chairman. Every bill must go to him for his approval. 

Mr. Lanning. The word " approval " is used, is it not? 

The Chairman. That is the phraseology-; the bill must go to him for 
his approval. 

Mr. Lanning. The Constitution confers upon the President the 
power, in express terms, to veto, approve, or disapprove Congres- 
sional acts. Of course, it saj^s nothing about the acts of such a legis- 
lative body as the Philippine Commission, and when you associate the 
President with legislation of the Philippine Commission, do we not 
raise a suspicion that he is made a part of the legislative body, and, 
if so, is there any objection to it that can be raised under the Consti- 
tution ? 

The Chairman. Section T, Article I, of the Constitution reads as 
follows: 

Every bill which shall have passed the House of Eepresentatives and the Senate 
shall, before it become a law, be presented to the President of the United States; if 
he approve he shall sign it, but if not he shall return it, with his objections, to the 
House in which it shall have originated, who shall enter the objections at large on 
their journal and proceed to reconsider it; 

and then they can pass it over his veto, etc. So, to the extent of his 
signature, he enters into all legislation. 

Mr. Patterson. Mr. Chairman, what is the purpose of making a 
provision there for the approval of the President or the Secretary of 
War at all? You have got a Commission there appointed. Why not 
give them this power? 

Mr. Robinson. They are not responsible to anybody. They are 
not elected. 

Mr. Crumpagker. It is a safeguard. 

The Chairivian. If the United States is to be in any sense morally 
or otherwise bound to pay these bonds, it has got to have some one 
here with veto power 

Secretary Taft. There is this practical distinction: If you insert 
"with the consent of the Secretary of War" with respect to the issue 
of bonds, there will be an affirmative approval by the Secretary of 
War under his hand. Now, every act is presumed to be approved, 
unless disapproved by the Secretary of War. That is, the acts are 
notified to the Secretary of War, and if he takes no action that con- 
stitutes an approval. That has been the practi<^e ever since the Philip- 
pine Commission began to legislate. Where 5'ou insert, however, in a 
section like this, " With the consent of the Secretar}^ of War" when 
the bonds are to be issued, it would involve, probably, and indeed all 
the bonds heretofore issued have had, the approval of the Secretary on 
their face. 

Mr. Lanning. Why not say "With the consent and approval of the 
Secretar}^ of War?" What objection could be made from any view 
point ? 

The Chairman. With the "consent and approval" first of the Sec- 
retary of War; put those two words as thej" are in the other sections. 
Let the consent be preliminary to the issue of the bonds. 

Mr. Olmsted. The issue of bonds would meet the affirmative act of 
the Secretary ? 



STATEMEISTT OF HON. WILLIAM H. TAFT, SECRETARY OF WAR. 37 

Secretary Taft. Yes, sir. Of course, it is a little difficult for me 
to saj" what motives enter into the minds of bond purchasers, though 
the}^ seem to be entirely willing- to take any bonds from the Philip- 
pine government the issue of which is authorized b}' Congress. They 
may assume 'a moral guaranty by the United States Government; I 
do not know. 

The Chairman. Will you permit me to ask this question right there ? 
Is not the whole purpose of this section to empower "the government 
of the Philippine Islands, mider such limitations, terms, and condi- 
tions as it may prescribe, with the consent and approval of the Presi- 
dent and Secretary of War, to authorize and enable, by appropriate 
legislation, any municipality of said islands to incur indebtedness, bor- 
row money, to issue and sell (at not less than par value in gold coin 
of the United States) registered or coupon bonds?" 

Secretary Taft. Yes, sir. 

The Chairman. That means, does it not, that the act of the Philip- 
pine Commission which authorizes the local municipality to issue 
bonds,, etc., shall receive first the consent of the Secretaiy of War— 
the act itself shall be sent here for approval? 

Secretarj^ Taft. Yes, .sir. If you strike out "the Secretary of War,'' 
then you add to the sanction of the act a requirement that does not 
apph^ to other acts, to wit. the express approval of the President of 
the United States. And possibly that ought to be put in in order to 
give the issue more protection. 

Mr. Lanning. What ought to be put in ? 

Secretar}^ Taft. What 1 object to in its present form now is that 
the President and Secretary of War are made a board with apparent 
equal rights. As a matter of fact, that is not the way it works. The 
Secretary of War is the finger of the President and acts for him, and 
therefore when you say "with the approval of the President and 
Secretary of War," it does not mean anything more than the approval 
of the President. 

Mr. Lanning. Why should not this be with the consent and 
approval of the Secretary of War, and strike the word "President" 
out, because the Philippine government belongs to the Department of 
the Secretaiy of War? 

Secretary Taft. That is true, sir; but if you put in "the approval 
of the President," you secure an additional sanction, and that is what 
I understand the act contemplated — a sanction additional to that which 
applies in ordinary legislation. 

Mr. Patterson. Mr. Secretary, if these bonds are issued and 
approved by the Secretary of War and the President, does it not com- 
mit the United States indefinitely to this scheme of improvement in 
the Philippine Islands, and would not the Government be held 
responsible, not only morally but legally as well? 

Secretaiy Taft. No, sir. 

Mr, Patterson. If the bonds were approved? 

Secretary Taft. No, sir; I do not think so. For instance, suppose 
the islands were to be declared independent and the government were 
established out there, the obligation of the bonds would depend upon 
the treaty of transfer, the negotiation, whatever it was. Ordinarily, 
bonds of this sort follow the territory for whom they were issued., 
though not always. 



38 STATEMENT OF HON. WILLIAM H. TAFT, SECRETARY OF WAR. 

Mr. Patterson. Without any change of that sort, would not the 
Government 

Secretary Taft. The government itself, the Phillippine govern- 
ment, is responsible. 

Mr. Patterson. I understand that is responsible, but would not 
this Government be responsible also? 

Secretary Taft. Except morall}^, I think not. 

Mr. Patterson. If they approve the bonds, would that not make 

Secretary Taft. They authorize the bonds. 

Mr. Patterson. They authorize and approve them as 1 understand 
the terms of this act. Would not that make a legal obligation as well 
as a moral one ? 

Secretary Taft. I think not. 

Mr. Williams. The}^ approve the act under which the bonds were 
issued. 

Secretary Taft. For instance, suppose the State of Tennessee should 
authorize Shelby County to issue bonds, as it did, or the city of Mem- 
phis, or the Shelby taxing district. The suits were brought against 
those local corporations. They could not be brought against the 
State of Tennessee because it enabled or authorized the local corpora- 
tions to issue the bonds. And it does not seem to me that the relation 
of the Philippine government is anj^ closer to the United States Gov- 
ernment than the Shelby taxing district, or the city of Memphis, or 
county of Shelby would be toward the State of Tennessee. It is a 
subordinate corporation exercising the functions of government which 
may be under the ordinary rule delegated. 

Mr. Patterson. In that kind of a case, Mr. Secretary, I do not 
think the State would feel any moral obligation to pay the bonds. 
You suggested here probably the Government, having authorized the 
issuance of the bonds, would feel a moral obligation to protect those 
bonds. 

Secretary Taft. That is only because the United States Government 
would have a little more conscience than the State of Tennessee; that 
is all. I do not think the morality of the obligation is any stronger in 
the one case than in the other. 

Mr. Patterson. Is it not a fact, Mr. Secretary, that you have 
stated here that these bonds would command a better price if approved 
b}^ the President and Secretary of War than they would if issued under 
the authority of the Philippine Commission? 

Secretaiy Taft. I am not prepared to say. I did not think I had 
said 

Mr. Patterson. I thought you had stated that. 

Secretary Taft. Of course, . all that the bondholders want is cer- 
tainty as to authorit}^, and if they are certain of the Congressional 
authority and the issue of bonds in accordance with that authority 

Mr. Williams. It is there business to see if they have been issued 
in accordance with authority ? They have means of looking that up ? 

Secretary Taft. And if the means supplied are sufficient to enable 
them with certainty to assure themselves, why, so much the better. 

Mr. Williams. Mr. Secretary, I do not understand that this guar- 
anty from the National Government would even go so far as to guar- 
antee that the bonds were issued in accordance with authority? 

Secretary Taft. Not at all. 



STATEMENT OF HO]Sf. WILLIAM H. TAET, SECEETARY OF WAE. 89 

Mr. Williams. It is simply a guaranty that the authority given 
the Philippine Commission is sufficient? 

Secretary Taft. Yes; that is all. The Government of the United 
States is to give preliminary authority, and then it is at the risk of the 
bondholder to sa}^ whether that authority has been properl}'- followed. 

Mr. Williams. Or whether the securit}^ is good? 

Secretary Taft. Yes, sir. 

Mr. Patterson. How does it add anything to the validity of this 
authorization by Congress to the Philippine Commission to saj" that 
the bonds must be approved? 

Secretaiy Taft. It does not add anj^thing to their validit3^ 

Mr. Patterson. In other words, an investor would not have any 
difficulty in determining that the bonds were rightfully authorized, if 
this act were passed eliminating the approval of the Pi-esident and 
Secretary of War? 

Secretary Taft. That is quite true. All it does is to secure in the 
issue of the bonds, and as a condition precedent to the issue of the 
bonds, the exercise of the discretion of either the President or the 
Secretary of War, as Congress may wish to have that discretion 
exercised, in determining whether the bonds shall be issued. 

Mr. Patterson. Why do you think investors would be more likely 
to take these bonds with this sanction or approval by the President 
and Secretary of War than without it? 

Secretary Taft. I did not intend to say so. 

Mr. Patterson. I understood you to say so. 

Secretary Taft. It adds an additional sanction, that is all. 

The Chairman. And it will go a long way to assure the people of 
the United States, if such assurance should ever be thought neces- 
sary, that the issue of these bonds was for legitimate purposes and not 
for the purposes of exploitation. It would have that assurance, 
would it not? 

Secretary Taft. I think it would insure the discretion of an officer not 
in the islands, but somewhat removed, and would add a responsibility — 
wovild impose on him, I mean, a responsibility in respect to the bonds 
which without such a provision would be absent. 

Mr. Robinson. Are you quite sure, Mr. Secretaiy, you could float 
a bond issue without an express indorsement — without the hand on the 
bond itself? 

Secretary Taft. I do not know. I onlj^ know the bonds which we 
ha.ve issued have always been issued by the War Department, signed 
with the signature of the Secretary of War and signature of the gov- 
ernor of the islands. 

Mr. KoBiNSON. That was rendered necessar}?^ in the Hawaiian bonds. 

1 think it would make possible the floating of the issue. 

Secretary Taft. What affects bondholders I am not prepared to say. 

Mr. Williams. Mr. Secretary, if we limit the approval of the Sec- 
retary of War to the act itself, without looking after an3^thing subse- 
quent to that, why should not the proviso at the conclusion of section 

2 be changed in accordance with that, and instead of s tying: "'And2:)ro- 
mdedf%irtTiei\ That the creation of indebtedness and the issue of bonds 
under this section shall be approved by the President of the United 
States and the Secretary of War," say: " That the act authorizing the 
indebtedness and issue of bonds shall be first approved?" 



40 STATEMENT OE HON. WILLIAM H. TAFT, SECRETARY OF WAR. 

Secretary Taft. This seems to require the approval of the act and 
also the issue of the bonds. 

Mr. Williams. I do nofthink myself that ought to be a part of the 
duty of the Secretary of War. I think it ought not to go beyond 
simply the act itself. 

Secretary Taft. It is convenient for the Secretarj^ of War to super- 
vise the issue from here, because the Philippine government has no 
means of acting except through the War Department. Otherwise it 
will have to employ a financial agent in New York Cit}'^ and be sub- 
jected to expenses that they now can avoid. 

Mr. Williams. Of course, if he approves the issue, it might imply 
some liability, you know, as to a guarantee against any irregularities 
in the issue of the bonds there. 1 mean as to the steps that have 
been taken there to compi}^ with the law. ' 

Mr. Warnock. Is not this proposition similar to the authority that 
was granted for the issuing of the friars' land bonds ? 

Secretary Taft; I have not that act with me. 

Mr. Warnock. I have the impression that the Attorney-General 
has published an opinion somewhere — at least I have seen a newspaper 
notice to that eflect — that the United States is practically liable for 
those bonds. 

Mr. Williams. Those bonds were issued under an act of Congress 
directl}'^ ? 

Secretary Taft. Yes, sir; they were issued under section 7, 1 think, 
of the act. 

Mr. Williams. It was by an act of Congress that they were nego- 
tiated, and not by any act of the Philippine Commission? 

Secretary Taft. Authority was given to the government of the 
Philippine Islands, but there were mandatory obligations on the part 
of the Philippine government to buy. 

The Chairman, I have the friar-land section if you would like it. 

Mr. Crumpacker. This whole question was settled in the original 
bill. The bill proposed before the committee now is simply to amend 
the original section by striking out "by consent of Congress" and 
adding " Secretary of War." 

Mr. Williams. That proviso goes further. 

Secretary Taft. I will read: 

And for the purpose of providing funds to acquire the lands mentioned in this sec- 
tion said government of the Philippine Islands is hereby empowered to incur indebt- 
edness, to borrow money, and to issue, and to sell at not less than par value in gold 
coin of the United States of the present standard value or the equivalent in value* in 
money of said islands upon such terms and conditions as it may deem best, regis- 
tered or coupon bonds of said government for such amount as may be necessary, said 
bonds to be in denominations of fifty dollars or any multiple thereof, bearing inter- 
est at a rate not exceeding four-and-a-half per centum per annum, payable quarterly, 
and to be payable at the pleasure of said government after dates named in said bonds 
not less than five nor more than thirty years from the date of their issue, together 
with interest thereon in gold coin of the United States of the present standard value 
or the equivalent in value in money of said islands, and said bonds shall be exempt 
from the payment of all taxes or duties of said government, or any local authority 
therein, or of the Government of the United States, as well as from taxation in any 
form, by, or under any State, municipal, or local authority in the United States or 
in Pliilippine Islands.' The moneys which may be realized or received from the 
issue and sale of said bonds shall be applied by the government of the Philippine 
Islands to the acquisition of the property authorized by this section, and to no other 
purposes. 



STATEMENT OF HOTST. WILLIAM H. TAFT, SECRETARY OF WAR. 41 

Mr. Jones. We did not need to do so for the reason that the issuing- 
of those bonds was a special authorization ? 

Secretary Taft. Yes, sir. 

Mr. Jones. And did not need to be approved. But in a general one 
like this, 1 understand this reservation of approval by the President 
and Secretary of War is simply intended 

Secretary Taft. To secure their discretion. 

Mr. Jones. To secure the discretion and approval of those repre- 
sentatives of the United States Government? 

Secretary Taft. Yes, sir. 

Mr. Jones. And that is all about it, as I understand it? 

Secretary Taft. Yes, sir. 

The Chairman. We now come to section 4. 

Secretary Taft. Section 4 I would like to skip and go on to the 
others, and then come back to it, because it is likely to involve consid- 
erable discussion. 

The Chairman. Section 5, then ? 

Secretary Taft. Section 5 provides: 

That the immigration laws of the United States in force in the Philippine Islands 
shall be administered by the officers of the Philippine government, designated by 
appropriate legislation of that government, and all moneys collected under said laws 
as duty or head tax on alien immigrants coming into the Philippine Islands shall not 
be covered into the general fund of the Treasury of the United States, but shall be 
paid into the treasury of the Philippine Islands to be used and expended for the 
government and benefit of said islands. 

The necessity for that section requires a statement of a little legis- 
lative historj^ Under the old immigration act the provisions, so far 
as they had been made applicable by executive order of the military 
government, were continued under the civil government without 
amendment. Of course, therefore, in applying the act, the military 
governor was able to sa}^ that these laws shall be enforced by the offi- 
cers of the Philippine government and designate what officers should 
enforce them. The oificer in question was the collector of customs of 
the Archipelago, but the new immigration law provided a new machinery 
for the enforcement of the law, and at the end of the law was con- 
tained a section which said: "This shall appl}^ not only to the United 
States but all possessions of the United States;" and that then involved 
the inquiry: "Who is to execute the law in the Philippine Islands? 
Shall the United States officers charged with that duty in the United 
States send out a number of agents to enforce that Jaw in the Philip- 
pines, or shall the law continue to be enforced by the Philippine col- 
lector of customs?" 

The law officer of the law department dealing with the situation, 
which was very difficult to deal with (it ma}^ be said b}^ main strength),, 
held that there was power to enforce the law by the collector of cus- 
toms of the Philippine Islands, and it was not necessary for the United 
States to send men out and increase the expense to enforce the law in 
the Philippine Islands. And that was approved by the supreme court 
of the islands. I think the case is now on its way to the Supreme 
Court of the United States. Congress, in act 9480, in the legislative,, 
executive, and judicial bill, I think, that has passed both Houses now^ 
has made provision as follows: 

The immigration laws of the United States in force in the Philippine Islands shall 
be continued to be administered by the officers of the Philippine government. 



42 STATEMENT OF HON. WILLIAM H. TAFT, SECRETARY OF WAR. 

We have been very anxious in the islands and in tlie War Depart- 
ment, so far as possible, to have the only bond between the Philip- 
pine government and the United States the War Department, the 
Secretary of War, and the governor of the islands, because were we 
to have bureaus in various departments of the United States Govern- 
ment exercising independent authority in the Philippine Islands it 
would lead to hopeless confusion. They could not get on at all; yet 
there is a natural disposition on the part of the heads of some bureaus 
to get their fingers into the government of the Philippine Islands. It 
was not the case here, because the head of the Department of Commerce 
and Labor that is charged with the enforcement of the immigration 
laws was entirely willing to have those laws enforced as they had been 
theretofore, so that by friendly arrangement the laws continued to be 
enforced in this way until Congress has confirmed the action taken. 
But there is one feature which is not covered b}^ the legislative 
appropriation bill, and that is the feature covered bj'^ the second part 
of this proposed section, as follows: 

And all moneys collected under said laws as duty or head tax on alien immigrants 
coming into the Philippine Islands shall not be covered into the general fund of the 
Treasury of the United States, but shall be paid into the treasury of the Philippine 
Islands, to be used and expended for the government and benefit of said islands. 

Now, as a matter of fact, the amount collected under the immigration 
laws hardl}^ pays more than the expense (I mean in the Philippine 
Islands) of enforcing those laws; therefore, the only effect of section 6 
is to permit the money which we collect to be used to pay the expenses. 

The Chairman. Under the law, Mr. Secretary, as it now stands, 
that is not the amendment which General Bingham put in the legisla- 
tive appropriation bill, that money collected in the Philippines has to 
be deposited in the Treasury of the United States ? 

Secretary Taft. It ought to be; but I think there is a construction 
by some of the auditing officers which permits us to set off the 
expenses against the collections before we make the deposits. 

The Chairman. Yes; but if there was any considerable surplus it 
would have to come to the Treasury of the United States, and this 
amendment which you propose would obviate that and have it pass 
directh^ to the Treasury of the Philippine Islands without having it 
coming here in the first instance? 

Secretary Taft. Yes, sir; so far as the money is concerned it is a 
very unimportant item; so far as the trouble of accounting is con- 
cerned, it is a very considerable item. 

Mr. Degetau. In relation to this section I would like to know your 
opinion of the practical value of the means to avoid the disembark- 
ment in the Philippine Islands of Chinamen. Do j^ou think, for so 
long a coast, it is easy to patrol that coast and prevent the disembark- 
ment of the Chinamen, for instance? 

Secretary Taft. W^e have fifteen revenue cutters that cost us a mil- 
lion dollars; and, by the way, I have omitted to mention that we paid 
that out of the revenue of the islands. With these we are able to fur- 
nish fairly good protection against the violation of all laws, except the 
importation of opium. Opium is in such small packages, it can be sold 
in so many various wa3^s by Chinamen, it is almost impossible to avoid 
the evasion of duty; but so far as the introduction of Chinamen them- 
selves is concerned, if we can avoid fraud by the officials, we can keep 



STATEMENT OF HOIST. WILLTAM H. TAFT, SECRETARY OF WAR. 43 

the L.hinamen out. 1 think we are about as successful in this regard 
as the}^ are in the United States. 

Mr. Degetau. You }-ef er to the present condition ? 

Secretary Taft. Yes, sir. 

Mr. Degetau. In case the}^ could have any reason to desire in a 
more intense way to go to the Philippine Islands, it would be a little 
difficult, it would seem to me, in a practical way, to prevent entrj^ 

Secretary Taft. Yes, sir. I can only say the profit which a China- 
man will make if he gets into the Philippine Islands over what he earns 
in Hongkong or in Canton is so very great now that there ought to be 
a very great influx of Chinamen if the laws could be easily avoided. 
Now, the result of the census of the Chinamen shows a very much less 
number than we supposed. We had supposed there were about 60,000 
Chinamen in the city of Manila. As a matter of fact, there are prob- 
ably not more than 25,000. And so in the other cities the estimates 
are to be similarl}^ reduced by reason of the census. 

Mr. Degetau. That seems to indicate the ingression is not ver}^ 
highl}^ desired hy the generality of the Chinamen. But, I say, if con- 
ditions should change, if we could have a greater 

Secretary Taft. Chinamen are willing to come in if they can; 
because, we had an investigation and the trial showed a corrupt con- 
tract made between two Americans and a vice-consul with the tautai, 
(he is a Chinese official), by which coolies were to be furnished means 
of getting into Manila as merchants, and were to pay, I think, $150 to 
$200. I spoke with one of the accomplices about that matter and he 
said that they ought to have put it up to |400. If they are willing to 
pay $400 to come in, it is an indication there is some profit in it after 
they get in. But I do not think that the laws are very much evaded; 
I mean, by getting in anyhere except in Manila itself, by fraud. 

The Chairman. We will now take up section 6. 

Secretar}^ Taft. Section 6 I would like to have read as follows: 

The Philippine Commission, or the legislature which shall succeed it, is hereby- 
authorized to fix the annual compensation of the judges of the supreme court at not 
exceeding $10,000 a year. In case there shall not be a quorum present in the 
supreme court on account of the absence or illness of judges thereof, or because of 
vacancies which have not been filled in said court, then it shall be within the power, 
and it shall be the duty, of the civil governor to designate as many judges of the 
court of first instance to sit in the supreme court as shall be required to make a 
quorum. When so designated, a judge of first instance shall exercise all the powers 
and functions of a supreme judge. If his usual place of residence is in Manila, then 
he shall receive no additional allowance for sitting on the supreme court. If, how- 
ever, his usual place of residence is at some other place in the Archipelago, then 
he shall be allowed his reasonable traveling expenses from his usual place of resi- 
dence to Manila and return, and he shall also be allowed the sum of 10 pesos a day 
during his absence from his place of residence under such designation. 

I do not think from our experience that the salary which is paid to 
the supreme judges of the court of the Philippine Islands is sufficient. 
The salary is now $7,500 for the chief justiceand $7,000 for the asso- 
ciate justices. We have had two or three very valuable judges from 
America, all of whom have resigned and are coming home, because 
they find it impossible to live and maintain themselves with the salary in 
Manila; therefore I would like very much if it could be left to the dis- 
cretion of the Commission to fix the salaries and not impose it on Con- 
gress at all. Thesecond provision, that which enables the civil governor 
to keep the supreme court full, I think will appeal to the committee, and 



44 STATEMENT OF HON. WILLIAM H. TAFT, 8E0EETAEY OF WAE. 

it is one that is quite essential at present, because there are coming 
over to the exposition two or three Filipino members of the court who 
have leaves of absence and whose coming away will destroy a quorum. 

The Chairman. Mr. Secretary, that reminds me of j^our testimony 
given here two years ago. You then said that the supreme court of 
the Philippine Islands, consisting of seven members, three of whom 
were native Filipinos (the chief justice himself being a native Filipino), 
would compare favorably with the supreme court of any State in the 
United States, in your judgment. Does that still obtain? 

Secretary Taft. Yes, sir. The appointment of supreme judges now 
rests with the President, and we are very anxious to maintain the 
standard of that court if we can. 

The Chairman. It has been up to this time a body of able law3^ers 
and of men of superior character'? 

Secretary Taft. I do not like to use invidious comparisons, but one 
of the ablest men on the bench. Judge Willard, of Minnesota, has 
resigned, and is coming home simply because his expenses of ■ living 
in Manila are so great that he can not afford to live there. 

Mr. Robinson. Would you venture an opinion as to the appropriate 
salary ? 

Secretar}^ Taft. If I were fixing it myself — 1 do not think the Com- 
mission would fix it that way, because Judge Ide and some of the 
other members are more conservative than I — if 1 were fixing it 1 
should fix it at $10,000 a year. There is nothing more important in 
the islands than the high character of that court. 

The Chairman. Mr. Secretary, judges in the supreme court in New 
York receive $17,500 per annum. Do you think that their duties are 
any more important than are the duties of the judges of the supreme 
court of the Philippine Islands ? 

Secretary Taft. No, sir. 

The Chairman. Does it require any more ability ? 

Secretary Taft. No, sir; but that argument, however, would affect 
a good many other judges. But, Mr. Chairman, the difficulty in get- 
ting men suited to that position in the Philippine Islands is much 
greater than that of getting men for New York Cit}^ 

The Chairman. I did not mean to imply they ought to pay $17,500, 
but I only mention that as an illustration. 

Secretary Taft. Yes, sir. 

Mr. Olmsted. On the other hand, the salaries paid in Pennsjdvania 
to the judges of the supreme court are $7,500 each. 

Secretary Taft. Yes, sir. 

Mr. Olmsted. In what particular, except the inconvenience and the 
undesirability of going to the Philippines to live, is it more expensive 
to live in the Philippines than in Philadelphia'^ 

Secretary Taft. I think rents are higher considerably in the Philip- 
pines than they are in Philadelphia. Or do they always live in Phila- 
delphia? Do thej^ not live in Harrisburg? 

Mr. Olmsted. Part of the time in Philadelphia and part of the time 
in Pittsburg; a week or two in Harrisburg. 

Secretary Taft. There is this to be said about providing a lawyer 
of sufficient ability to justify his appointment to the supreme court 
of the islands, that he ought not to go out there without the expecta- 
tion of stajang ten or fifteen 3rears. Unless you can count on his 
doing that, the Government loses a great deal by his preparation, b}^ 



STATEMENT OF HON. WILLIAM H. TAFT, SEOKETARY OF WAH. 45 

losing the preparation and inaking necessar^y the new preparation 
of other candidates, because a man who goes on to that bench has a 
great deal to learn. Now, in order to induce a man to sta}^ there ten 
years, he ought to h^ve the opportunit}^ to save- something. The honor 
of sitting on the bench of the supreme court of Pennsylvania would 
doubtless lead many to sit there and spend more than their income, 
but when you go out to the Philippine Islands men look at it in a dif- 
ferent wa3^ Of course it is an honorable position; but the}' take their 
families with them, and the}^ feel that those years are passing away 
during which they ought to be laying up some money; and I think we 
ought to give them a salary which will enable them to do so; at least, 
a salary which will enable them to get enough life insurance to save 
their families from need should they be carried off. 

Mr. Olmsted. Though the actual expenses of living were not greater 
than in one of the Eastern or Middle States, nevertheless, in order to 
get a good man to go there he would expect, and ought to be paid, 
more ? 

Secretary Taft. Yes, sir. I do not share what I must admit is the 
popular feeling, that one in going to the Philippine Islands makes a 
great sacrifice. I think when you go to the Philippine Islands and 
live there and get comfortabl}^ settled in a house life is exceedingly 
pleasant. But I think lawyers who go there, of the type that you 
need, unless they save something, feel they ought to be at home. 

Now, the rewards of the bar in Manila thus far have been very high, 
altogether too high, much too high for the standard of the lawyers 
that we have out there; but it was a case of the supply not being 
equal to the demand. I do not know of a place where a young lawj^er 
of ability, who familiarizes himself with Spanish and the Spanish codes, 
can more rapidl}^ accumulate a practice, if he maintains a-high char- 
acter and charges reasonable fees, than he can in Manila. And many 
of the lawyers that practice before the supreme court, American 
lawyers, have an income twice and three times and four times as large 
as the judges of the supreme court. 

Mr. Warnock. Carrying out this same reasoning, the supreme court 
of Ohio takes a large part of their compensation in honor? 

Secretarj^ Taft. I think the}^ do. 

Thereupon the committee adjourned until 10.30 a. m., March 17, 
1904. 



Committee on Insular Affairs, 

March 17, lOOJ,,. 

Hon. Henr}^ A. Cooper, chairman, presiding. 

STATEMENT OF HON. WILLIAM H. TAFT, SECRETAKY OF WAR— 

Continued. 

Mr. Robinson. Mr. Chairman, on the matter that we left when we 
came to an adjournment yesterdaj' — the proposed amendment by the 
Secretary of the bill permitting the Commissioners to fix the salaries 
of judges — I wanted to ask Secretary Taft if the provision giving to the 
Commissioners the right to fix the salary of the judges, coupled with 
the amendment you proposed, would not be an invitation to absen- 
teeism, and it not being safeguarded and checked b}^ any taking away 
from the salary of the incumbent who gets a fixed salarj^, whether it 
would not suggest possible abuse ? 

Secretary Taft. There is a specific law as to the amount of vacation 
a judge can take. He is allowed two months every year, and every 
three years some additional amount to enable him at the end of three 
years "to go home. There is a court vacation, in other words, every 
year during the hot season, from the 1st of May to the 1st of July. 
Then every three years he is allowed an additional vacation of three 
months, so that he may go home and spend two months at home and 
come back. 

Mr. Robinson. Does that in any way open up or enlarge that right? 

Secretary Taft. No, sir. And you will observe also that I did not 
make provision that the person who takes the place should get any 
additional salary other than allowances for traveling expenses. Now, 
possibly prowsion might be, made by which the absent judge should 
share with the holding judge 

Mr. Robinson. That is probably not necessary if not an - enlarge- 
ment of the original law. 

Secretar}^ Taft. No, sir; it is not. 

Mr. Robinson. I believe we have arrived now at the point of the 
mining laws on the bill if we want to follow it seriatim 

Secretary Taft. There are one or two things I wanted to inject, if 
I may, before I get to that. I think I had explained our experience 
in that matter and that we were losing our good American judges." 

Mr. Crump AOKER. Would there be any ob j ection to fixing a maximum 
allowance, say $10,000? 

Secretarv Taft. No; except that would be a suggestion 

Mr. Crumpacker. At the same time 1 think that if the committee 
should report this bill it would materially assist in getting it through 
the House. 

Secretary Taft. I would not have the slightest objection to that. 

Mr. Crumpacker. You see an unlimited power of that kind would 
be subject to criticism in the House. 

47 



48 STATEMENT OF HON. WILLIAM H. TAFT, SECRETAEY OF WAK. 

Secretary Taft. Yes, sir. 

The Chairman. I had noted on m}^ bill a suggestion for an amend- 
ment. 

Secretary Taft. Not exceeding |10,000; it is quite possible the Com- 
mission would not go to $10,000. Judge Ide, who is the watchdog of 
our Treasury, comes from Vermont, and gentlemen from" Vermont 
believe in small salaries. 

Mr. Robinson. I think it highly improbable that Congress will sur- 
render its right to fix the salaries of judges in the Philippine Islands. 

The Chairman. It is getting to be more and more the policy of 
Congress not to leave to executive officers the expenditure of public 
funds in their discretion, except within prescribed limits. 

Secretary Taft. I have observed, if I ma}^ be permitted to say so^, 
when Congress was in favor of a very large salary it did not want to 
exj)ressly declare, it would leave the responsibility to the Executive to 
fix it. 

Mr. Crumpaoker. This bill rests the discretion in the Government; 
that is, legislative, executive, and judicial. 

Secretary Taft. Yes,. of course; in all these matters, gentlemen, I 
am only making these suggestions as tentative, with the hope that 
some action lasij be taken. 

Mr. Crumpaoker. 1 regard it as quite important that we hear from 
Judge Taft on section 4 of the present bill. All the balance of the 
bill now is simply amendatory of the existing law, changing the Amer- 
ican to metrical measures. 

Secretarj^ Taft. Yes, sir; but there are one or two provisions I 
would like to introduce into the bill, amendatory of the existing law, 
which have come to my attention since the matter was presented in the' 
form of a report. 

Mr. Crumpaoker. What is the necessit}^ for making a change in 
system of measuring? 

Secretary Taft. It is a matter recommended strongl}^ by the com- 
missioner of the land office, or chief of the bureau of the land 
office, who is at the head of the mining bureau. I understand that 
there are inconsistencies in the act growing out of the fact that with 
respect to certain measures the metric system is used ancl with respect 
to other measurements the English system is used. Now, in the Phil- 
ippines the metric system has always been used, except where other 
measurements have been introduced by this new legislation, and it 
would be wise to make it uniform, that is all. It is not a very impor- 
tant matter except to the officers of the land and mining bureau. 

Mr. Crumpaoker. It does bring some embarrassment, the fact that 
you have a complication of the two systems? 

Secretary Taft. Yes, sir. The original bill as proposed contained 
all metrical measurements, but you remember there were three or 
four gentlemen on the Senate committee from Idaho, Utah, Colorado, 
who were very familiar with mining laws, and who held long sessions 
and made the mining laws the chief part of the Philippine bill, really. 
And in introducing the amendments which they did introduce they 
failed to notice the necessity for uniformitj^ in meas.urements. There- 
fore, the amendments are reallj^ unimportant in the change of dis- 
tances, because the present amendments are substantially the same 
distances, only expressed in metrical measurements rather than the 
the English measurements. 



STATEMENT OF HON. WILLIAM H. TAFT, SECRETARY OF WAR. 49 

I should like to recommend the adoption of an amendment to sec- 
tion 8 of "An act to establish a standard of value, and to provide for 
the coinag-e system in the Philippine Islands." 

Mr. Crumpacker. That is not in this bill at all? 

Secretary Taft. No, sir. 

Mr. Crumpacker. We have not copies of that law, have we, here? 

The Chairman. Of the Philippine law? 

Mr. Crumpacker. Of the coinage law. 

The Chairman. That is in the Philippine act. 

Secretary Taft. This is the coinage law you passed last 3^ear. Haven't 
you that? 

The Chairman. Yes; we have that here. 

Mr. Jones. It is in this book (Committee on Insular affairs, House 
of Representatives, Fifty-seventh Congress, first and second sessions), 
entitled "An act to establish a standard of value and to provide for a 
coinage s.ystem in the Philippine Islands," on page 676. 

Secretary Taft. The next section should read as follows: 

Section — . Section 8 of "An act to establish a standard of value and 
to provide for a coinage system in the Philippine Islands, approved 
March 2, 1903," is hereby amended b}^ striking out the word "ten," 
in the sixth line thereof, and inserting in Heu thereof the words "one 
thousand," so that the treasurer of the Philippine Islands shall, under 
the conditions and restrictions in such section, be authorized to issue 
silver certificates therefor in sums of not less than two nor more than 
one thousand pesos. 

We ask that in order 

The Chairman. Would you say in " sums" or in "denominations?" 

Secretary Taft. Well, in denominations. Probably that is the bet- 
ter term. Our idea is that under such authority the Treasury would 
issue notes for two, five, ten, twenty, fifty, one hundred, five hundred, 
and a thousand pesos. It greatly facilitates the interchange of money 
in the islands, because the registered mail can be used. Silver certifi- 
cates are very popular Jhere. Thej^ aid us to introduce the system 
and we would like to have a little more elasticity in the denominations. 
Possibly a thousand pesos is too great; but certainly we ought to have 
five hundred pesos. 

Mr. Crumpacker. The currencj^ reformers of the House would 
oppose seriously anything of that kind, I imagine, but the conditions 
are different there. You have no paper currency except bank notes? 

Secretary Taft. That is all; and we have very limited banking 
facilities, so that we should like to use the notes instead of drafts, 
really. 

Mr. Needham. It would only leave it discretionary, anyway, with 
the Treasury ? 

Secretary Taft. Yes, sir. 

We should like to have power vested in the Commission to modify 
or repeal the tonnage tax imposed on vessels coming into the harbor 
of Manila. You will observe that the Commission itself adopted a 
revenue law; that is, a customs law, which included the fixing of a 
tonnage law tax and other impositions on commerce. Congress 
approved, you may remember, that customs law, just as it had been 
adopted by the Commission. 

Mr. Crumpacker. I think that was in the Philippine 

Secretary Taft. That was in the act of March 8, 1902. 
I A— 04 4 



50 STATEMENT OF HON. WILLIAM H. TAFT, SECRETARY OF WAR. 

Mr. Crumpacker. In the Philippine revenue bill? 

Secretary Taft. Yes, sir. Now 

Mr. Needham. We would not have jurisdiction in that matter^ 
would we? 

Secretary Taft. Now, with the adoption b}^ Congress of that, it 
became rigid, so we could not modify it; we had no power to do so. 
What we would like to have is power to modify the tonnage tax with 
view to encouragement of the coming into Manila harbor of large 
steamers from San Francisco, and 'to enable us to encourage large steam- 
ers to come from Hongkong and Singapore. 

Mr. Crumpacker. You would not want power to impose a discrim- 
inating tonnage ? 

Secretar}?^ Taft. No; we would simpl}^ wish power to modify or 
repeal the tonnage tax under that act of March 8, because it is so that 
with a large steamer like the Korea^ or one of the steamers of Mr. 
Hill's coming from Seattle, if it can only be sure of small tonnage in 
the harbor of Manila it does not come at all, because the tonnage tax 
is so much that it does not pay him to come. 

Mr. Crumpacker. Your system imposes a tax on capacitj'^ instead 
of cargo? 

Secretary Taft. Yes, sir. 

Mr. Crumpacker. So that if a big steamer could come into your 
port with a small cargo 

Secretary Taft. And make it pay. 

Mr. Crumpacker. And make it pay. It discriminates against the 
large steamers? 

Secretary Taft. Yes, sir; and of course we are anxious to have as 
many calls at the port of Manila as possible. It would not affect our 
income greatly, and we are quite willing to reduce the income because 
of the benefit we would certainly derive by the frequent calls from a 
steamer. 

Mr. Crumpacker. What would you tliink of the policy of imposing 
a tax upon cargoes instead of upon capacity of steamers? 

Secretary Taft. That would be a good deal oetter. Then the ques- 
tion would be, the cargo which they are carrying through or the cargo 
which they are bringing. 

The Chairman. Have you an amendment drawn in the form in 
which you would like to suggest it? 

Secretary Taft. I am sorry to say 1 have not. Because it did not 
occur to me until j^esterday afternoon. One of the steamship officers, 
Mr. Swearin, of the Pacific Mail, came in and called my attention to 
that, and only enforced what we had already discussed in the Com- 
mission on the same general subject. Mr. Swearin, of course, was 
interested for his large vessels, the Korea., the Siherla., the Manchuria, 
and the Mongolia, and there are others who are very much interested 
by reason of the Hongkong-Manila trade. If any gentleman goes to 
Manila and does not strike a steamer that goes through and does not 
go to Hongkong first, and then takes the small vessel which plies, 
between Manila and Hongkong over the shallow China Sea, he will be 
convinced of the necessity of doing something to enlarge the size of 
the vessels. 

There is no sea in the world that is so rough at all times of the year 
as China Sea between Hongkong and Manila, because the direction 
which has to be taken throws the rqonsoon abeam. That is, six months 



STATEMENT OF HON. WILLIAM H. TAFT, SECRETARY OF WAR. 51 

in the year the monsoon blows from the northeast and six months 
from the southwest, and the vessel has to run athwart (across) the 
wind so that it produces a very heavy motion. The vessel is in the 
troug-h of the sea a good deal of the time. If we can enlarge the ves- 
sels which are in that port it is to our great advantag'e. There are two 
comparatively large vessels in the Hongkong trade now — the Hosetta 
Maru and a similar name. The Rosetta Maru has the sobriquet of the 
"Rolling Rosie." 

The Chairman. Is that a Japanese vessel ? 

Secretary Taft. She belongs to a Japanese company. I will submit 
an amendment in regard to the matter, and will send it to the stenog- 
rapher. 

Mr. Needham. If Congress should meet your expectation in this 
regard and abolish the tonnage tax and put one upon the cargo, would 
it be just to put it onlj^ upon that portion of the cargo that is dis- 
charged there? 

Secretar}^ Taft. I should think it would be better, because what 
we want to do is to get as many calls as we can, and we do not want 
to interfere with the stoppage of a vessel there which may have a 
larger carg-o for some other port. I would like, if possible, to place 
the imposition of the tonnage tax not exceeding 6 cents, say, as it is 
in the law, within the power of the Commission either to reduce or 
abolish. We have no desire to increase it at all. 

Mr. Crumpacker. It is now 6 cents per ton ? 

Secretary Taft. Yes, sir. 

Mr. Crumpacker. If you put on a cargo tax you might want to 
increase it? 

Secretary Taft. Yes, sir; we might. 

Mr. Needham. Especially if it onl}'^ applied to that portion that was 
discharged ? 

Secretary Taft. Yes, sir. 

There is another section that ought to be passed, but I do not know 
but that it will meet opposition. I suppose it would seem to savor of 
^' imperialism." It is really a matter of convenience. 

The Chairman. That would be a new section after section 10, then? 

Secretary Taft. Yes. A chief executive of the Philippine Islands 
is known as the civil governor. That title is an anachronism. It was 
all right when there was a military governor, and to distinguish the 
civil executive from the military executive the term "civil governor" 
was proper. Now there are 38 governors of provinces, and then there 
is the civil governor, and the term has no meaning. The term which 
they all understand out there, and which has a meaning, the governor- 
general, that is, the general governor over all, is the title which ought 
to be applied. 

Mr. Jones. That was the Spanish title? 

Secretary Taft. The Spanish title was the "captain -general," ordi- 
narily. That referred to his military rank, for he had, ex-oflicio, as 
the head of the islands, the military rank of captain-general, and he 
was called, indifferently, "captain-general" or "governor-general." 
For instance, on the china, such of it as is left in the Malacanan Palace, 
the china is marked "C. G. de Filipinas," Captain-General of the Fili- 
pinos; but on a good many of the chairs which are there there is 
carved "G. G.", which is "governor-general." 

The Chairman. That means general governor? 



52 STATEMENT OF HON. WILLIAM H. TAFT, SECRETARY OF WAR. 

Secretary Taft, That is all; it means the governor as distinguished 
from the governor of a province. 

I have mentioned the mining laws, the onl}^ change in which is the 
question of the measurements, and now that brings me to where we 
have finished everything except section 4. 

Mr. EoBiNSON. Mr. Chairman, I think it appropriate at this time, 
and I want to make a line of inquiry, and I believe 1 can make a state- 
ment so that in the discussion of section 4 we can bring all matters out 
and do it concretely and save time, by suggesting that I would like to 
have what views Mr. Secretary has upon the subject of the future 
inhabitancy by the whites of the Philippine Islands. 

Assuming that this is a tropical country, much lower than Hawaii, 
I assume it will be a country of vast landed estates, worked b}'' coolj^ 
or that class of labor for fifty years or more; that the whites, by rea- 
son of the virulence of the bubonic plague, cholera, and smallpox, 
ever present and in epidemic form, and by reason of the health condi- 
tions there "which require by the rule of the War Department the 
return of the soldiers after a stated period, and from the fact that the 
Philippine government is unable to keep school teachers there satis- 
factorily, it will never be a white man's country in an}^ sense; and, 
possibl}^, that not 1 per cent of the entire people will ever be whites, 
and heretofore that possibl}^ not more than 1 per cent of Manila's 
population, and no per cent outside of Manila before American occu- 
pancy. I make this statement, so that after the general features of 
section 4 have been gone over we might have some statements on that, 
because the Secretary's views will be very valuable, I think. 

The Chairman. It strikes me, Mr. Secretary, that the discussion 
had better be deferred until we finish the bill. I suggest that we go 
over the railroad section and then take up the matter referred to by 
the gentleman from Indiana. 

Secretary Taft. I am willing to take it up at any time. 

When the Americans came to the island they found one railroad 
there. That railroad runs from Manila into Bulacan, into Pampanga, 
into Tarlac, into Pangasinan, and ends at Dagupan, or Gulf of Lin- 
gay en. 

Mr. Olmsted. What is that distance? 

Secretary Taft. It is about 120 miles. There were no branches to 
the railroad. 

Mr. Needham. Is that a broad-gauge railroad? 

Secretary Taft. Three feet 6 inches; that is a gauge that is some- 
times called the ""oriental gauge." It is a gauge that I believe is used 
in New Zealand. It is the gauge that was begun in India, but in India 
now they have only two gauges, the broad gauge of 5 feet 6 inches, 
and a naraow gauge of a meter (39 inches) instead of 3 feet 6 inches. 

It was constructed under very precise regulations drawn by the 
Spanish engineers and enforced by the Spanish Government. They 
were obliged to put in very heavy iron bridges; they were obliged to 
put up a railway station in Manila that is large enough and heavy 
enough to be the railway station for a system of 1,000 or 1,500 miles. 
It is constructed of iron and steel. They were obliged to erect at 
every station station houses of brick, together with warehouses of 
brick, and there is an iron derrick — a revolving derrick — at every 
station, although the business at most of the stations did not warrant 
them at all, and, as a matter of fact, they are not used. They are 



STATEMENT OF HON. WILLIAM _H. TAFT, SECRETARY OF WAR. 53 

there, but not used. The result of this method of construction was 
that quite a large amount of money was wasted — that is, the cost of 
the road was made to exceed what it ought to have cost. 

The contract, or the concession, provided that the Spanish Govern- 
ment would guarantee to the English company (for it is an English 
company) 8 per cent dividends from the $5,000,000 capital which it 
was thought would be used in the construction. As a matter of fact, 
they say that it cost them eight or nine millions of dollars. I do not 
know how that is. That was the guaranty of the Spanish Govern- 
ment, at any rate. After we went there, there was a strongh^ founded 
suspicion that the railroads were being used for the benefit of the 
insurgents. I suppose the truth was that the manager of the railroad, 
who was an Englishman, or rather an Irishman, was trying to pre- 
serve his property and he was negotiating with both sides for the- 
purpose of doing as little with either side as possible and still saving 
the property. He did not save the property-; at least, after the insur- 
gents had been driven down the line they destroyed what bridges and 
rolling stock they could destroy. Then the government took charge 
of the railroad and itself ran the railroad for about a year, or nine 
months of a year, and then turned it over to the company again. 

The company has presented to the Government of the United States 
a claim, first, for rent and occupation of the railroad; second, for the 
payment of the guaranty during the period when the}^ were receiving 
no income, and third, for damages done to the railroad while the rail- 
road was in the custody of the United States' authorities. Those 
claims have never been settled. The law adviser of the Department 
and the Attorney-General have ruled that the Government of the 
United States and the Philippine government are not responsible for 
the guaranty of the Spanish Government; that that is a personal 
guaranty; that there may be (this the Attorney -General intimated — 
Judge Magoon, of the War Department, did not follow him in that) 
some sort of equitable liability on the part of the provinces through 
which the railroad passes to contribute a part of the guaranty, but 
how that is to be enforced and how it is to be reached 1 confess I am 
not able to state. As a matter of fact, we never have recognized it 
and never have paid it. Without prejudice to these claims, the Com- 
mission, under the power which was given it by the Congress of the 
United States, granted to this English company two franchises for the 
construction of a railway from about this point [indicating] 34 miles 
into this region of Nueva Ecija, and from Manila directl}'' eastward 
into the mountains or foothills. I think it is about 17 miles, immediately 
east of Manila. 

Mr. Lanning. The first one extending, Mr. Secretary, from a short 
distance from the north of Manila still farther north? 

Secretary Taft. The first one running from a point called Bigaa, 
34 miles through San Isidro, which is the capital of Nueva Ecija, to 
Cabanatuan. Then there were two branches authorized by the rail- 
road company for the convenience of the military. There was a branch 
a mile long at Bautista leading to a military camp and a branch 5 
miles long at Angeles leading to another military post. Those con- 
cessions were made in the ordinary form of concession for American 
railroads. There was no agreement to guarantee dividends, but they 
were to construct the roads and run them at rates to be fixed by the 
legislature. 



54 STATEMENT OF HON. WILLIAM H. TAFT, SEOKETAEY OF WAE. 

Mr. Smith. They all connect, Mr. Secretary, with the main line? 

Secretary Taft. With the main; yes, sir. Part of all the branches 
have now been constructed; 1 think 10 miles of the Cabanatuan branch 
and perhaps 7 or 8 miles of the Antipolo branch. At a point in the 
foothills just east of Manila, 17 miles, is Antipolo. And the two mili- 
tary roads to Bautista and Angeles have been full}^ constructed. 

Secretary Root was ver}^ much interested in securing American capi- 
tal for the construction of railroads in the Philippines. He conferred 
with a number of gentlemen whom he thought he could interest, and 
among others Sir William Van Horn, connected with the Canadian 
Pacific Railway, but who had constructed the Cuban Railwaj^ from 
Habana to Santiago — I think it is. His experience in tropical railroad 
building he thought was valuable. But he said he was too much occu- 
pied in Cuba; that he could not himself make an original investigation, 
but that if we would send men whose opinions he valued he would recom- 
mend to us to make a report, and that report might be published, and 
if he subsequently took an interest he would be willing to paj^ the 
expenses of the engineers. We concluded we would simpl}^ send those 
engineers and pay them ourselves, which we did. That report on the 
general subject of railroads in the Philippines you will find in the 
volume which I have ordered sent to each member of the committee. 
I do not know whether they have come or not. 

The Chairman. This is Part 1. 

Secretary Taft. If 3^ou will let me take that I will refer to the 
report [referring]. It is Exhibit P, on page 399, Mr. Chairman, of 
this volume, a copy of which 1 have ordered sent to each member of 
the committee. Now, Secretary Root thinks, and it is possible, we 
made a mistake in granting the franchise from 25 miles north of 
Manila on the main line to Cabanatuan and up into Nueva Ecija, because 
it will possibly prevent other companies from going in to construct 
lines from here, paralleling the Manila line, or part way, and then 
running up into the mountains here and down the Cacayan Valle}^ to 
Aparri, which is one of the trunk lines recommended by Norton & 
Drew. Cabanatuan is about here [indicating] in Nueva Ecija. 

The Chairman. How far from Manila? 

Secretary Taft. It is about 55 miles from Manila, perhaps 60. 
Then, as you go north from that point, j^ou have to go through the 
Caraballo Pass, which is a pass from 2,500 to 3,000 feet high, and then 
through Nueva Ecija until you strike the valley of Cacayan River, 
which is the richest vallc}^ in all the archipelago. That is the valley 
in which tobacco is grown in such excellence and to a greater extent 
than an^^where else in the archipelago; but the valley is very sparsely 
settled, and a railroad constructed there must depend upon building up 
the country itself in order to make it a profitable enterprise. Norton & 
Drew also recommend the construction of a line from Dagupan north 
on this — you will observe here is a mountain spine on the west [indi- 
cating] and there is a mountain spine on the east. They recommend a 
railroad north from Dagupan and west of the western mountain spine 
along the seashore clear up to Laoag. That is very thickl}^ populated, 
and, on the whole, the population is the best industrial race in the 
island. 

There is no railroad to the south of Manila, but there is a most 
important highway, or rather a communication, by means of the lake 



STATEMENT OF HON. WILLIAM H. TAFT, SECEETAEY OF WAR. 55 

to Calamba and then from Calamba through the province of Ba tan- 
gas down to the town of Batangas on the bay of Batangas and 
Laguna, Laguna being the province on the lake; and they are ordi- 
narily very rich and highly cultivated provinces and ought to be 
reached by railroad. The English company has been anxious to secure 
the franchise for the Batangas line, but we have not been willing to 
grant it. The complication of the presence of the English compsnaj is 
one which we should be ver}^ glad, if we could, to eliminate. And I 
have talked with Mr. Scott, who is the president of that company, 
with a view to seeing whether they are willing to sell out to an}^ com- 
pany that might undertake a general improvement in the islands. I 
think they are. I think they are willing to sell out or make an 
arrangement with one banking firm, Speyer & Co. , and they would 
prefer to deal with Speyer & Co, because Speyer & Co. have a branch 
in London. I should be glad if Speyer & Co. had the concession on 
proper terms. But 1 do not think it fair that Speyer & Co. should 
receive, in the question of deciding who should get the concession, an 
advantage because of their relation to the English company. 

It seems to me that the English company ought to be willing, if it 
is going to sell out, to sell out to an}^ concessionaire of the govern- 
ment on the same terms. But you can see the complications that will 
arise in awarding concessions to various capitalists unless we can elim- 
inate the English company. It would be greatl}^ to the advantage of 
everybody, I think, if the person receiving the concession in the islands, 
as to Luzon at least, should have control of the English compan}", 
because with the property of the English company it would be much 
more profitable for it to bra'nch out in other directions. It would not 
be subject to the squeezing competition of the English company with 
its line right in the middle of Luzon. 

I visited New York last week, or week before last, and held a con- 
ference with a number of capitalists who seemed to be willing to go 
into the enterprise if they could be assured of Government aid in the 
form of a guaranty. That is, of course, a form of aid that presents 
difiiculties, as every form of aid from the Government does. The* 
history of railroads in the English, and, so far as I am advised, in the 
Erench colonies, is that they have been begun by Government guar- 
anties of income upon the amount invested, and that after ten or 
fifteen years of construction of works under such contracts the 
Governments have themselves built the railways. Now, if Congress 
prefers to have Government-constructed railways, well and good. I 
suppose the Commission will undertake the work. Personally, I think 
it is greatly better to fix exactly the limit of the liability of the Gov- 
ernment and trust the work to private enterprise, because if 3^ou 
have railroads constructed by the Government it means a tremendous 
enlargement of the personnel of the Government employees. 

It adds greatly to the rovitine and burden of government, and I am 
afraid that it will add greatly to the cost of the Government, because 
I believe that private enterprise can manage railroads much more 
economically than they could be managed by the Government. I have 
referred to Luzon onl}'", and I have not completed my reference to 
Luzon. You observe this boot [indicating on map] that runs east 
from Batangas, including Tayabas and Ambos Camarines, Albay, and 
Sorsogon. Albay and Sorsogon, and the southern part of Ambos 



56 STATEMENT OF HON. WILLIAM H. TAFT, SECEETAEY OF WAE. 

Canuirines, are to-day the most extensive hemp-producing provinces 
in the islands. In Albay it has not been an uncommon thing at all that 
carabao carts with two carabaos have rented for $40 Mexican a day for 
transportation; many fields of hemp have been allowed to rot because 
of the lack of transportation; and I feel reasonably certain that the 
construction of a railway from the Legaspi around the volcano of 
Mayon to Tabaco, and then up to Nueva Caceres in Ambos Camarines, 
and down to Pasacao, a seaport on the China Sea, the hemp could be 
delivered here, and carried directly from there to Manila, instead of 
having to be hauled in carts from the mountains to Legaspi and then 
down through the San Bernadino straits and up this way to Manila. 
And that railroad would probably pay from the beginning, because it 
will supply a want that has long been felt. 

That railroad, however, could hardly be carried on clear up to 
Batangas, because it would involve some very serious engineering difii- 
culties in the mountains here; and it would be much cheaper to ferry, 
so to speak, by steamer from here to Manila. But with this railroad- 
in the hemp district; with the railroad from Manila to Batangas and 
branch around to Cavite, and possibly a branch up through the capital 
of Leguna; the railroad as it is now to Dagupan, from Dagupan north 
to Laoag, and a railroad running up this, valley through the Caraballo 
Pass and down the Cagayan River to Aparri, would probably give all 
the railroad facilities that are needed; at least all the facilities that 
ought to be aided by the Government. I think after that the construc- 
tion of railroads would follow naturally and would follow the needs of 
the public. If those railroads were constructed in Luzon it would 
revolutionize the business of agriculture there. 

The Chaieman. What, in your opinion, would be the aggregate 
mileage that you have just indicated? Can you approximate it? 

Secretary Taft. Well, it is somewhere between 700 and 1,000 miles, 
I think, Mr. Chairman. I think about 750 miles, but I am not sure. 
Sir William Van Horn calculates that the cost of it would be about 
$35,000 a mile. I think that is a moderate estimate. I would be sur- 
prised if it cost more. 

The Chairman. $30,000,000 would cover it? 
. Secretary Taft. Yes, sir; I think possibly $25,000,000 or $30,000,000. 
Railroads in other oriental countries have cost somewhat more than 
that, but Sir William Van Horn's esti^aate is based on his experience 
in Caba, where he thinks the conditions are very like those that pre- 
vail in the Philippines. 

Mr. Robinson. Does the Van Horn statement include also the stock 
and equipment? 

Secretary Taft. I believe so; 3^es, sir. 

The Chairman. Four per cent on the $25,000,000 would be a bur- 
den of only $1,000,000 annually on the Treasuiy? 

Secretary Taft. Yes, sir. 

The Chairman. Could the Treasury handle that easily ? 

Secretary Taft. Yes, sir; we could handle it with the increase of 
business that would follow. 

The Chairman. The increased value of property there would be to 
tax, too? 

Secretary Taft. Yes, sir; but the increase in the export and import 
business, which affects directly the receipts from customs, would be very 
largely increased. 



STATEMENT OF HON. WILLIAM H. TAFT, SECRETARY OF WAR. 57 

Now the question of what the form of authority should be. I dis- 
cussed with everybod}^ 

The Chairman. Just one moment. Mr. Secretary, do you think the 
guaranty of interest on the investment is preferable to our old land- 
grant system ? 

Secretary Taft. Yes, I do; very much. I think it is a great deal 
better that the Government should know the limit of what it is giving 
rather than that it should give something which may become verj^ valu- 
able without its realizing what it is parting with. 

The Chairman. The increased value of the land you would retain 
for the people ? 

Secretary Taft. Yes, sir. 

Now, I have here Ways and Works in India, by G. W. McGeorge, 
in which he describes the railways in India. The}^ began with the 
guaranty system — that is, guaranteeing interest on money deposited 
in the treasury of the Indian government, which was expended under 
the supervision of the Indian government by the private owners for 
the construction of railways. There are various forms of guaranty, 
the variety being due to the method by which the money which is 
paid out by the government is returned to it. A provision in many 
of the guaranties in India was that the 5 per cent which was there 
allowed of the net earnings should be first applied to the dividends 
which were due under the guaranty. Second, everything over 5 per 
cent was to be divided, 50 per cent to go to the stockholders and 50 
per cent to reimburse the government for any previous advance guar- 
anty growing out of a possible deficit, and in that way the government 
was made whole. 

Another method that is suggested is that the guaranty should be 5 
per cent instead of 4; that 1 per cent of the 5 should be used as a 
sinking fund to create a fund to reimburse the government for any 
loss which it may sustain during th,e period of the guaranty, whether 
you make it thirty or forty years or fifty years, would reimburse the 
government for the amount of money which it should be held to for 
the guaranty. Now, with many of the railroads constructed here, the 
government would not be called upon to make good a guaranty at all, 
1 feel confident. For instance, suppose it were to guarantee 5 per cent 
of this railway in Albi. I have no doubt there would be no liability 
under that guarant}" arising, but the railroad running from Cabanatuan, 
the end of the branch to which I have referred, through the Caraballo 
Pass and down the Cagayan River to Aparri, the government might 
have to pay that guarant}^ for ten or fifteen years, because that rail- 
road, though very important in the development of the islands, runs 
through a country that is not now inhabited (1 mean not thickly 
inhabited), and oriental railways depend much more upon passenger 
trafiic for their dividends than do the western railroads. 

Oriental railroads generally depend for their receipts, 60 to 66 per 
cent, upon passenger trafiic and 34 to 40 per cent on their freight 
receipts, because the orientals 'are great travelers. They like to go 
fast, and they are willing to waste a good deal of money. A Filipino 
will take two chickens to Manila and use the price that he gets for the 
chickens in going and coming just for the pleasure of the railroad ride. 
Of course we hope to build up a freight trafiic, but there is that dif- 
ference between the oriental and the western railways. Now, the 
question of how far you are willing to leave this matter of guarantee 



58 STATEMENT OF HON. WILLIAM H. TAFT, SECRETARY OF WAR. 

to the discretion of the Commission is an important one. I have 
attempted to explain the complications of the situation. Of course 
the Commission in the awarding of concessions must be certain that 
the concessionaire is able to do the work. We could let concessions on 
very favorable terms to gentlemen who say they have had experience, 
and that they can get the capital; but what it means is that we are 
granting a concession to them to paddle around and secure capital 
after the concession is granted. That kind of concession we are 
anxious to avoid granting. We think it ought to be granted to some 
responsible firm who has money at hand to do the work should they 
enter into the contract. 

Whether competition in the form of advertising for rates ought to be 
inserted as a limitation upon the power of the Commission is one, of 
course, for the committee and House to determine. Personally, 1 
should prefer that it be not inserted as a requirement; not that I do 
not think it would be used, but thatl should dislike to restrict the dis- 
cretion of the Commission. You already give us unlimited power to 
grant concessions in the Philippine act, unlimited except it may be 
that we have no power to make guaranties. The law officer of the 
War Department has given an opinion that we have such power, but 
the Commission is not willing to exercise it without the express 
approval of Congress. When we came to grant the concession for the 
street railway in Manila, the history of that concession was this: A 
gentleman came to us and said he represented a syndicate of capitalists 
who would be glad to have the railway concession. Well, we asked 
him to prepare the form of concession that he thought suitable. He 
did so, and submitted it. We advertised that form and had a public 
meeting and discussed with everyone who came from the city of Manila 
and elsewhere the form that the concession ought to take. 

After very ample discussion, which lasted some two or three weeks, 
we got the franchise in such forui as we thought reasonable for the 
public, leaving blank the term of ihe concession, the percentage of the 
gross receipts that should be paid to the public by the concessionaire, 
and the rate of fare to be paid. Then we said to the applicant, " Now, 
you say that nobody will bid but you;" and he wanted to close the 
matter at once. We were not certain that we could get anj^body else. 
The truth was that there was not such eagerness on the part of capi- 
talists to come there to justify our hopes that others might come. But 
we said to him, " Congress under the Philippine act has, necessarily, 
the power to take away your charter, if you get it, if it seems to be 
unfair, and if it seems that you are getting too good a thing. It is 
therefore of as much benefit to j^ou as it is to us to have the franchise 
in the form in which it is now agreed upon, advertised, inviting bids 
upon the three varying terms of the franchise. It will take three or 
four months. It will have to be advertised in New York, Chicago, 
San Francisco, and in Manila, but you can well afford to wait that 
time, because, if after that advertisement you get the franchise, it 
would be wholly contrary to American traditions, wholly contrary to 
any action of Congress, to take away from you that which has been 
given by competition." 

So the advertisement was made, and there was only one bidder. 
My impression is, it was not the original applicant; at Ifast, there was 
some variation in the syndicate which took it. 1 judge so from the 
complaints of the promoter who came to us first. There seemed to be 



STATEMENT OF HOIST. WILLIAM H. TAFT, SECRETARY OF "WAR. 59 

some change; at least, he did not get the share he was expecting in the 
new company. However that was, the Commission exercised its dis- 
cretion in that way, and the Commission will be disposed, if opportu- 
nity offers, to exercise the discretion given under such a clause as this 
in the same way — by competition — if possible; but I think the com- 
mittee can see that, in view of the complications of the situation, it 
might be difficult to state a concession in such a way as to invite a 
bidding on particular terms. 

The Chairman. That concession was for the electric railway system 
complete in Manila? 

Secretary Taft. Yes, sir. 

The Chairman. When is that to be finished ? 

Secretary Taft. On Thanksgiving Day of this year. 

Mr. Patterson. Has American capital built that ? 

Secretary Taft. Yes, sir; so I am advised. The concessionaire is 
Charles Swift, of Detroit, a street railroad man of that city, and the 
contracting company — I mean the company that has made the contract 
for the construction with him — is J. G. White & Co., of New York. 

Thereupon the committee adjourned. 



ABROGATION OF THE AGREEMENT COMMONLY KNOWN AS THE 

BATES TREATY. 



Committee on Insular Affairs, 

House of Representatives, 

Monday, March 21, 1901^. 
The committee met at 10.30 o'clock a. m., Hon. Henry A.llen 
Cooper in the chair. 

The Chairman. While we are waiting for Secretary Taft we will 
take up the proposed substitute bill introduced by Judge Crumpacker 
(H. R. 13923). 

The committee proceeded to a discussion of the bill (H. R. 13923) 
introduced by Mr. Crumpacker, of Indiana, entitled "A bill confirm- 
ing the action of the President and Secretary of War abrogating the 
agreement commonly known as the Bates treaty," which is as follows: 

Be it enacted by the Senate and House of Representatives of the United States of America 
in Congress assembled. That the action of the President and Secretary of War taken 
on.the second day of March, nineteen hundred and four, unqualifiedly abrogating 
the agreement entered into between Brigadier-General John 0. Bates and the Sultan 
and certain datos of the Sulu Archipelago on the twentieth day of August, eighteen 
hundred and ninety-nine, and commonly known as the Bates treaty, is hereby con- 
firmed. 

STATEMENT OF HON. WILLIAM H. TAFT, SECRETAEY OF WAR. 

\ The Chairman. Mr. Secretary, we have been discussing the ques- 
tion of the abrogation of the Bates treaty in connection with Judge 
Crumpacker's bill. Will you please read the bill aloud. Judge Crum- 
packer? There is a dispute as to your position on this question of 
abrogation by Congress, Mr. Secretary. 

Mr. Crumpacker read aloud the bill referred to. 

Mr. Lanning. I would like to say before the Secretary of W^ar 
expresses his judgment on the bill that at the proper time I desire to 
move an amendment, if the matter goes so far, b}'^ striking out from 
the title the words " commonl}'^ known as the Bates treaty " and insert- 
ing in lieu thereof the words "entered into between Brigadier-General 
John C. Bates and the Sultan and certain datos of the Jolo Archipelago 
on the 20th of August, 1899." I want to avoid the use of the words 
'•Bates treaty," and instead of "Sulu" I want to make it read "Jolo 
Archipelago." In the Bates treaty the words used are "Jolo Archi- 
pelago." I will make that change in the body of the bill, and then in 
lines 8 and 9 strike out "and commonlj^ known as the Bates treaty," 
so that it will read — 

"That the action of the President and Secretary of War taken on 
the 2d day of March, 1904, unqualifiedl}^ abrogating the agreement 

61 



62 STATEMENT OF HON. WILLIAM H. TAFT, SECRETARY OF WAR. 

entered into between Brigadier-General John C. Bates and the Sultan 
and certain datos of the Jolo Archipelago on the 20th da}^ of August, 
1899, is hereby confirmed." 

Mr. Crumpackek. W hat is the proper name of the archipelago, in 
your legislation, Secretary Taft? 

Secretary Taft. The town is called Jolo by the Spaniards, but the 
Spaniards- always call the archipelago and the sea the Salu, although 
the names are supposed to be the same. So that General Davis, who 
is mj^ authority on most of those geographical subjects, refers to the 
sea as the Sulu Sea and the town and the island as Jolo. 

Mr. Lanning. In the agreement, as you will see b}^ looking at it, 
the expression Jolo Archipelago is used. 

Mr. Patterson. I think the Sulu Archipelago is broader than the 
Jolo Archipelago, and that this question of slavery exists in the whole 
Sulu Archipelago. 

Secretary Taft. Yes. 

Mr. Lanning. Probably that is tiue; but I think our language 
should conform to the language that is in the agreement itself. That 
was my idea. 

The Chairman. Now, Mr. Secretary, the motion is on reporting the 
Crumpacker substitute. 

Secretary Taft. And you asked me what the effect of this is ? 

The Chairman. Yes; and what 3'our idea is. 

Secretary Taft. I think the effect of this would be to give personal 
sanction of the abrogation with all the authority that Congress has to 
abrogate it, and therefore that the confirmation would be stronger than 
the original abrogation, in that Congress has the power to abrogate 
without reason, and we had only the power to abrogate for a reason. 
I do not mean to say that Congress would not by this also assert what 
we have asserted, namel}", that there was reason for this, that it is a 
ratification of our action as a proper one; but if Congress abrogates it, 
as it does here, there is nothing to be said after that. In other words, 
it is stronger, and it would be more useful, it seems to me, to have it 
pass than not to have it pass just as it is. 

Mr. Williams, of Illinois. As a lawyer, let me ask you this ques- 
tion: This matter was submitted to Congress some time ago? 

Secretary Taft. Yes; for its action. 

Mr. Williams, of Illinois. Now, 1 will ask j^^ou if in view of the 
fact that Congress has taken no action until it is reported that the con- 
ditions of the treaty have not been complied with, and then simply 
ratifies the action of the executive department in abrogating the 
treaty for the reason that those conditions have not been complied 
with, would it not be a natural inference that Congress did not object 
to the treaty or to the treaty remaining in force so long as the other 
parties complied with the conditions? 

Secretary Taft. Yes; I understand it 

The Chairman. I want to call the attention of the Secretary to the 
fact that the substitute does not mention the reasons. 

Mr. Williams, of Illinois. No; but we simply review the action of 
the President, which is based upon the failure to comply with the 
conditions. 

Mr. Jones, of Virginia. Not because it was originally bad, but 
because they would not comply. 



STATEMENT OF HON. WILLIAM H. TAFT, SEORETAEY OF WAR. QiS 

Mr. KiNKAiD. But we do not ratify the President's reasons — we 
ratify the act. 

Mr. Williams, of Illinois. If we show no reasons of our own, we 
adopt his. 

Mr. Jones, of Virginia. But pardon me. I understood from the 
testimony of the Secretar}^ of War some time ago that we did have to 
have reasons and that he was making up a record on which to 
base 

Mr. Williams, of Illinois. There is no trouble to get an answer 
from the members; what I wanted was an answer from the Secretary. 

The Chairman. If the Secretary will permit me to say one word 
(the Secretaiy has not heard this discussion). As I understand it, 
there is no reason why the Congress of the United States may not 
now abrogate the Bates agreement as of prior date. It has complete 
power in the premises. 

It may ratify the act of its own executive without giving any 
reasons. To agree in a conclusion may not mean to agree with the 
reasoning by which it is reached. The justices of the Supreme Court 
not infrequently concur in a decision but disagree on the reasons 
which justify it. 

Secretary Taft. I should say, as a proposition of law, that if the 
agent has the power to abrogate an agreement which is in existence 
subject to the approval or disapproval of the principal, and that the 
agent abrogates the agreement as an existing agreement, for a reason 
sufficient to abrogate it, and the principal comes along and confirms 
his abrogation of that agreement, that that confirmation would be given 
effect even although the reason of the agent was not a good one. 

Mr. Williams, of Illinois. I agree to that proposition; we all agree 
to that. 

The Chairman. That is this case exa,ct\j. 

Secretary Taft. And therefore I think this resolution thus stated is 
useful in that it relieves our position as to any investigation whether 
our position was right. 

Mr. Jones, of Virginia. I would like the Secretary to answer Mr. 
W^illiams's question. 

Secretary Taft. You mean as to whether this is a confirmation which 
would abrogate, whatever the reason ? 

Mr. Williams, 6f Illinois. Let the stenographer read the question. 

The stenographer read as follows: 

Mr. Williams, of Illinois. As a lawyer, let me ask you this. 

This matter was submitted to Congress some time ago. 

Secretary Taft. Yes; for its action. 

Mr. Williams, of Illinois. Now, I will ask you if, in view of the fact that Congress 
has taken no action until it is reported that the conditions of the treaty have not 
been complied with, and then simply ratifies the action of the Executive Depart- 
ment in abrogating the treaty, for the reason that those conditions have not been 
complied with, would it not be a natural inference that Congress did not object to 
the treaty or to the treaty remaining in force, so long as the other parties complied 
with the conditions. 

Secretary Taft. I think it would be a dangerous doctrine, although 
in some cases quite useful, if it could be said that Congress approved 
everything that was submitted for its approval and failed to approve 
or disapprove — failed to take any action upon. I think the ordinary 
rule of public policy is that failure to act, or— using the term with 
deference — neglect on the part of Congress, does not bind it to any 



64 STATEMENT OF HON. WILLIAM H. TAFT, SECRETARY OF WAR. 

position at all. Therefore, I should say that a failure to act did not 
affect in any way the status of the treat3^ 

Mr, Williams, of Illinois. But I am assuming, Mr. Secretary, that 
we are acting- at this late date, and acting for other reasons than those 
that we would have acted upon at first. 

Secretary Taft. Assuming that premise — that the failure to take any 
action at all does not commit Congress one way or the other — the ques- 
tion then arises, What is the inference to be drawn from its act in per- 
mitting what the Executive has done? The Executive has abrogated 
the treaty or it has not, according as the reasons which it gives are cor- 
rect or not. Now, Congress comes along and confirms that action with- 
out being obliged to give reasons. I should say that to infer from that 
that Congress approved the treaty at any time would be a violent assump- 
tion; it strikes me that way. 

Mr. Jones, of Virginia. Let me ask you a question. You agree 
that Congress has the absolute right to abrogate this treaty without 
reference to whether or not the Sultan and certain datos have violated 
its terms? 

Secretary Taft. Yes. 

Mr. Jones, of Virginia. You agree that the executive department 
could not abrogate the treaty save upon a record made up showing 
that the treatj^ had been violated by the other parties to the treaty ? 

Secretary Taft. Without respect to the record, without the existence 
of facts justifying that action 

Mr. Jones, of Virginia. Without the existence of facts justifying 
that action ? 

Secretary Taft. Yes, sir. 

Mr. Jones, of Virginia. Now, Congress has never 

The Chairman. There is a question of privilege before the House 
on the floor, and I think we will have to adjourn at this point. 

Mr. Jones, of Virginia. If you can wait long enough to get this 
answer. We are right in the midst of a question. 

Secretary Taft. Mr. Chairman, were not the volumes of our reports 
delivered here, one for each member of the committee? In my testi- 
mony I refer to the particular exhibit; I think it is Exhibit L. 

Thereupon, at 12 o'clock, the committee adjourned. 



Committee on Insular Affairs, 

Wednesday, March 23, 1904. 
The committee met at 10.30 o'clock a. m., Hon. Henry Allen Cooper 
in the chair. 

STATEMENT OF HON. WILLIAM H. TAFT, SECRETARY OF WAR— 

Continued. 

The Chairman. Mr. Secretary, when we concluded at the last meet- 
ing you were discussing the section of the bill relating to the proposed 
construction of railways? 

Secretary Taft. Yes, sir. Maj^ 1 go back one moment to offer what 
I do not think I formulated at the previous meeting, a section author- 
izing the Commission to repeal the existing provisions respecting ton- 
nage dues ? I merely asked such an amendment, without formulating 
it, and I have had it drawn and will read it: 

Sec. — . That the Government of the Phihppine Islands is hereby authorized and 
empowered to modify or repeal the existing provisions respecting tonnage dues on 
vessels entering ports or places in the Philippine Islands, as set forth in sections 14 
and 15 of act No. 230, enacted by the Philippine Commission on September 17, 1901, 
entitled "An act to revise and amend the tariff laws of the Philippine Archipelago," 
which said act was ratified and continued in force and effect by act of Congress 
approved March 8, 1902, entitled ' 'An act temporarily to provide revenue for the 
Philippine Islands, and for other purposes. ' ' 

I now come, Mr. Chairman, to the question of section 4. We 
think it is sufficiently established that capital will not come into the 
islands for the construction of railroads in sufficient amount really to 
develop the islands unless there be some government aid offered. The 
Government has perhaps 50,000,000 acres of land that it might offer, 
but the Commission has thought that Congress was indisposed to 
allow the ownership of very large quantities of land, which would be 
the result of land grants, to railroads along the line of the constructed 
route, and that perhaps Congress felt, as the Commission does, that 
the granting of such lands was giving a " pig in a poke," the value of 
them wholly incapable of estimation, and that it was much better if 
there was to be government aid that the amount of the aid should be 
known in advance. We feel that the government could bear the bur- 
den of $1,000,000 to $1,500,000 a year. 

The Chairman. The government of the Philippine Islands ? 

Secretary Taft. Yes, sir; a contingent liability if we would invite 
the construction of railroads in the island of Luzon. Indeed, it is 
quite probable that were the authority given to make the guaranty it 
should reach a contingent liability of $1,500,000 in the Philippine 
Islands, that not more than one-third of that amount would be used 
in Luzon, and that the rest might be used in other islands in the 
archipelago. 

I A— 04 5 65 



66 STATEMENT OF HON. WILLIAM H. TAFT, SECRETAEY OF WAR. 

I think I have already described to the committee the proposed rail- 
road routes in the island of Luzon, but there are short railroads which 
would be of the utmost importance in developing the islands, which 
might be constructed in other important islands, like that of the island 
of Panay, in which is Iloilo; the island of Cebu, which has inhabitants 
numbering between 500,000 and 600,000; the island of Leyte, which 
is just one mass of hemp lands, and so possibly the island of Samar 
and the island of Mindanao. 

Mr. Crumpacker. Section 4 provides 

Secretary Taft (interrupting). May 1 say that section 4 was hastil}'^ 
drawn? 

Mr. Crumpacker (continuing). Section 4 authorizes two methods of 
assistance — one by guaranteeing bonds and the other guaranteeing an 
income on the capital invested? 

Secretary Taft. Yes, sir. 

Mr. Crumpacker. 1 understand from jour remarks that you think 
the latter is the preferable plan of assistance? 

Secretary Taft. I do. It is a matter, however, of discretion, an 
experiment that I thought might be left to the Commission. 

Mr. Crumpacker. How would j^ou fix the basis of cost on which 
the guaranty should be paid ? 

Secretary Taft. Capitalists in New York object to fixing in the act 
of guaranty what I put in there. 

Mr. Crumpacker. I think you are right in putting it in. 

Secretary Taft. But it seems to me that it is wiser to say in advance 
to the capitalists, "This may cost this much and we will help you to 
this extent, and if it costs any more you must go on and complete it at 
your risk." 

Mr. Crumpacker. I presume your act of guaranty would provide 
the guaranty of a net income upon the amount of capital actually 
invested, not exceeding a fixed sum, or would it be an arbitrary sum? 

Secretary Taft. I think it might say not exceeding a fixed sum, but 
I think the Commission might very well send its engineers over the 
line and say, " This line ought not to cost more than |35,000 a mile. 
We will guarantee on $35,000 a mile the payment of the percentage 
which the Commission should reach within the limit of the act." 

Mr. Crumpacker. Practically all the commercial towns in the Archi- 
pelago are on the seacoast? 

Secretary Taft. Yes, sir; but there are some manufacturing towns, 
and some of the best are in the interior. The town of Lucban, in 
Tayabas, which is about 1,500 or 2,000 feet high, is a very good town. 
Then there is the town of San Isidro, which is also a very good town, 
far from the seacoast, about 35 miles from the present railroad and 
near the branch that we have already authorized. Generally speak- 
ing, the good towns are on the seacoast. 

Mr. Crumpacker. You have cheap transportation from the seacoast 
down to Manila and the other large centers of commerce ? 

Secretary Taft. Yes, sir. 

Mr. Crumpacker. So that means of transportation would still bs 
employed if the railroads were constructed? 

Secretary Taft. Yes, sir. 

Mr. Crumpacker. It would be cheaper doubtless than the railroad 
rates ? 



STATEMENT OF HON. WILLIAM H. TAFT, SECRETARY OF WAR. 67 

Secretary Taft. It would with this exception, that the winds blow 
with so much regularit}^ and severity during six months of the year 
that the towns without land-locked harbors that have only sea com- 
munication are separated from the rest of the world those six months. 
For instance, the towns on the east coast all the way down, with the 
exception of those which have harbors, all towns on the east of Minda- 
noa, the towns on the east coast of Samar, and the towns on the east 
side of Luzon, are practically separated from Manila and the rest of 
the world during the time when the northeast monsoon blows. To 
come to a little more concrete illustration: We were discussing the 
other dsij the construction of a railroad from Dagupan [indicating on 
map] up to here — Laoag, in Ilocos Norte [indicating on map]. While 
the southeast monsoon blows it is practically impossible to land any- 
where north of the capital of Union, San Fernando. You can get in 
there behind a little cape, but with that exception all this coast [indicat- 
ing on map] is not to be reached except by roads, in the southwest 
monsoon. 

Mr. Crumpacker. I asked the question with a view of ascertaining 
what 

Secretary Taft (interrupting). What benefit the railroad would be? 

Mr. Crumpacker. Yes, sir; and the prospect of its paying any divi- 
dend at all on the investment. 

Secretary Taft. Yes, sir. 

Mr. Crumpacker. If there could be cheaper transportation by 
water and the facilities are sufficient, of course it would materially 
affect the prospects of a railroad being a paying institution ? 

Secretary Taft. Yes, sir. Here is the city of Manila [indicating 
on map] and here is the city of Dagupan [indicating on map]. There 
is water transportation from Manila clear around to Dagupan, and 
you can get over the bar once every twenty -four hours at Dagupan, 
but that does not at all interfere with the business done over the rail- 
road between Manila and Dagupan. The regularity of communica- 
tion is really what* dete-rmines the profitable method of communication. 

Mr. Crumpacker. In your opinion, will the provisions of section 4 
embrace electric roads? What do 3^ou think of the expediency of 
constructing electric roads? 

Secretary Taft. I believe thej^ might very well be built; I think 
they ought to. 

Mr. Crumpacker. Do you not think that section 4, if it is not broad 
enough to cover electric lines, should be made so ? 

Secretary Taft. Yes, sir. They are very much cheaper of construc- 
tion, and of course electric lines are frequently built along highways 
where they do not have grading to do. Nevertheless, there are elec- 
tric roads of which we should have a guaranty. The electric road 
which we count so much on, which runs from Dagupan up to Bagnio, in 
Benguet, from the uncertainty of the traffic that road requires that the 
government should aid it in some way or secure an income for several 
years until the capital can be built up and until a brigade post can be 
constructed so that there will be business. 

Mr. Crumpacker. And then lateral lines from the steam lines may 
be extended to the commercial lines? 

Secretary Taft. Yes, sir. We are counting greatly on the use of 
electric roads, because in some parts of the islands we hope there will 



68 STATEMENT OF HON. WILLIAM H. TAFT, SECRETAEY OF WAR. 

be a very constant supply of water power. Coal is so expensive that 
it seriousl}" interferes with the profits from steam railroads. 

Mr. Crumpacker. One other question, and that is the labor question. 
I read the report of Mr. Norton, and he seemed to be rather skeptical 
or pessimistic about labor conditions. 

Secretary Taft. Yes, sir. 

Mr. Crumpacker. He says he bases his estimate of expense of cost 
of the railroads upon Chinese labor, I think; that he would not under- 
take to say that the lines he has examined could be built for the money 
he has estimated with native labor. What is your opinion ? 

Secretary Taft. I think Mr. Norton's view upon that subject is not 
to be trusted, because I think he did not have sufficient data upon 
which to g'ive his judgment. I have been talking- with Sir William 
Van Horn, who had a very large experience in Cuba. He said he 
would not build a railroad in a tropical countr^^ like Cuba or the 
Philippines except with native labor and he would not build it by con- 
tract; that he would build it b}^ administration of the railroad. He 
sa3^s it is somewhat more expensive, but the building of a railroad by 
men who are charged with the responsibility of cultivating the good 
will of the inhabitants is both for the railroad and for the government 
under which the railroad is constructed, of the utmost importance. 
He says that his railroad in Cuba by building not by contractors but 
by administration of the railroad has made it popular from one end of 
the line to the other. 

The Chairman. Please explain what you mean by building "b}^ the 
administration of the railroad." 

Secretarj^ Taft. I mean that the railroad itself hires the laborers 
and appoints the agents, and does the work through agents rather than 
through independent contractors. He says that he is not in the slight- 
est degree frightened by the Norton report on the subject of native 
labor; that native labor needs instruction and that is one of the advan- 
tages of introducing railroad work; that the natives are taught how to 
work and that it is entirely feasible to teach them. ■• 
■ Mr. Crumpacker. Railroad building is hard, muscular labor? 

Secretary Taft. Yes, sir. 

Mr. Crumpacker. Do you think the natives there have the will 
power, the moral force, to undertake and follow that kind of labor? 

Secretary Taft. I am very confident of that. I do not think rail- 
road labor is any harder than quarry labor, do you? 

Mr. Crumpacker. Perhaps not. 

Secretary Taft. At the mouth of Manila Bay we are employing in 
quarrying stone for the Manila port works 1,000 men, and if jou will 
look in the report, I think it is copied in my report, you will see a 
statement bj'^ Mr, H. Krusi, vice-president of the Atlantic, Gulf and 
Pacific Company, as to his success with labor. 

Mr. Crumpacker. I read that, and I noticed the statements of offi- 
cers at the naval stations. 

Secretary Taft. That is as to skilled labor ? 

Mr. Crumpacker. Yes, sir. It was very gratifying to me. 1 have 
always been skeptical about the labor question in the archipelago. 
• Secretary Taft. You will find, if j^ou consult the persons who live 
in Manila and have emplo,yment for 10 or 15 people, perhaps 20, that 
they are as severe as possible in their condemnation of the Philippine 
labor, but our experience as a Government does not justify that at all. 



STATEMENT OF HON. WILLIAM H. TAFT, SECRETARY OF WAR. 69 

1 am not sure whether the report you have contains the report from 
the officer who is in charge of the Benguet improvement. He is now 
working 3,000 men. 

Mr. Crumpacker. I read in that connection about the excursion of 
a lot of laborers who went up the hill and down again. 

Secretary Taft. Yes, sir; you saw the final conclusion to that? 

Mr. Crumpacker. Yes, sir. 

Secretary Taft. After that we succeeded in getting 3,000 laborers, 
who are now at work and have been at work for six months and are 
doing good work. 

Mr. Crumpacker. These gentlemen seem to have been under the 
control of a walking delegate. 

Mr. Needham. It is your judgment that unless the Government 
gives this guaranty or some other form of governmental aid that there 
will be no satisfactory development of the railroads in the archipelago? 

Secretary Taft. Not for a number of years, and I think it will be 
exceedingly slow. I think so both because of the slowness with which 
it came during our stay in the islands and consequently because of the 
experience in other quarters. In India they have now 27,000 miles 
of railway, and if my figures and recollection are right about half of 
those railwaj^s were constructed under what is called the guaranty 
system and the other half were constructed outright by the govern- 
ment. 

There are no private lines except those which were begun with the 
guaranty sj^stem in India, and I think that is true in Australia and 
New Zealand. English capital is much more prone to go a long dis- 
distancefrom home than American capital; at least we have found it so. 
The Spaniards were unable to get anybody to come there except by 
guaranteeing 8 per cent on the estimated cost of the railroad. 

Mr. Needham. Was that due to the fact that the islands were never 
in a tranquil state? Suppose we enforce tranquillity there? 

Secretar}^ Taft. Of course the question of tranquillity would have 
something to do with it. When the grant was made, I do not know 
when the concession was given to the Spanish railwa3^s, but I think 
it must have been five or six j^ears before the insurrection and thej^" 
had nothing but ladrones and there was no organized insurrection. 
Of course the railway itself is a very great tranquilizer. 

It has had that efiect in Mexico. Mr. Norton told me that he made 
surveys in Mexico when it was very dangerous to make surveys, but 
the effect of the Mexican railwaj^ was that the ladrones changed to be 
policemen. 

Mr. Crumpacker. If we make a guaranty of a net income on the 
investment as an inducement do you think economical management 
will be as great as otherwise? 

Secretary Taft. Yes, sir; I have prepared it with a view to what 
has been brought out in the discussion in New York, formed from 
the section which was originally proposed. There is omitted from this 
what I think ought to be put in the same provision that is in the printed 
section, to wit, that the amount of capital to be invested should be 
certified in the act itself. 

Sec. 4. For the purpose of aiding in the construction, maintenance, and operation 
of railroads in the Phihppine Islands, the Philippine government is authorized to 
guarantee an income of not exceeding five per centum 



70 STATEMENT OF HON, WILLIAM H. TAFT, SECEETAEY OF WAK. 

The gentlemen in Wall street thought that it would be necessary to 
have 5 per cent. I do not think that is unnatural. 

The Chairman. You mean for them to think so? 

Secretary Taft. For them to think so, and for them to say so. I 
am not altogether convinced that we can not get it for 4 per cent, but 
that is a question for the committee, whether they will leave it to the 
discretion of the Commission to secure that. 

My impression from talking with capitalists in New York is that 
possibly we can secure some competition if there be some state aid, 
and if there is competitition then we con Id certainly get it for 4 per 
cent — 

upon capital invested in the construction and equipment of such railroads or any 
part thereof, the guaranty to be in such form and under such provisions requiring 
repayment of any sum paid thereunder as the Philippine government shall deem to 
be to the public interest, and the act making the guaranty shall declare the proper 
rules for ascertaining clearly the capital actually invested in said railroads and the 
/net income actually received on the capital so invested and shall set forth the limit 
of invested capital to which said guaranty shall apply. 

The committee will readily understand that there is no subject which 
can be made one of such bitter discussion as what the net income of a 
railroad is, and it seems to me that the Commission ought to say in 
advance, or to lay down certain rules in advance, and remove the 
reason for that discussion. 

and shall provide for government supervision of the conduct of the finances of the 
road and its location, construction, and maintenance, as well as by the presence in 
the board of directors of two or more government directors, the number and manner 
of their selection to be determined by law, and also by such further supervision 
through the auditing, engineering, and railroad bureaus of the Philippine government 
as the public interest shall require. 

In India the guaranteed railroads were built by those who were to 
be stockholders in the roads, pa^dng the money into the Indian treas- 
ury, and then the roads were built^ under the supervision of the engi- 
neering officers of the government, so that they knew or were sup- 
posed to know just the amount of money that went into the investment. 

Mr. Ceumpaoker. Your section does not contemplate any control 
over the number or the salary of the directors or officers of the road 2. 

Secretary Taft. No, sir. Still it does say "shall provide for gov- 
ernmental supervision of the conduct of the finances of the road." 

Mr. Crumpacker. That would prevent any dispute? 

Secretary Taft. Yes, sir. 

The Chairman. What has been the experience of England in India ? 

Secretary Taft. 1 do not say that they have not had trouble in 
working out the system of guaranty. The guaranty contracts var}^, 
sometimes taking one form and sometimes taking another, and the 
question frequently troubled them as to the actual amount which was 
invested, whether the actual amount was properly stated or not, and 
what went into road afte. its first construction should be carried to 
capital and so have the benefit of a guarantj^ On the whole, I think 
that Indian governments prefer the construction of- railroads by the 
Government itself. The home office prefers the guaranty system, 
because it does not seem to like government ownership. 

The Government may, in its discretion, admit material imported for the construc- 
tion and equipment of railroads to be constructed in said islands to free entry as 
material imported for the use of the Philippine government. Provided, however, 
That the total annual contingent liability oi the Philippine government under the 



STATEMENT OF HON. WILLIAM H. TAE^T, SECEETAEY OF WAK, 71 

guaranties authorized by this section shall not at any time exceed the sum of one 
million five hundred thousand dollars. The said guaranty may be made in the 
form of a guaranty of interest on bonds or of income on jjreferred or common stock 
as may be determined by said government, and shall be made upon such terms and 
conditions as the said government of the Philippine Islands shall approve. 

Here is something that was inserted at the request of the gentlemen 
with whom I talked, but I submit it to the committee: 

(Copy not furnished printer.) 

That is, while the Government is liable on the guaranty that the 
bonds may be exempt from taxation. 

Sir William Van Horn thinks that the islands offer a fair prospect 
for remuneration on capital invested after the investment gets to going 
in respect to a number of lines, and in respect to others it will take a 
longer time. 

The question of how long the guaranty shall continue — whether it 
shall be thii't}^ years, forty years, or ninety-nine years as in England, 
or perpetual, is another question. I do not quite see how Congress 
can enter into all those details, because they will vary so much with 
each line to be constructed, and it is a matter that you must trust 
somebody to exercised iscretion in. My own judgment is a guaranty 
ought not generally to exceed forty years, and then I think, too, there 
ought to be an arrangement b}^ which every cent of money paid by 
the Government should constitute a lien on the property, to be repaid 
to the Government in some future time. That may be secured either 
by a sinking fund or by a division of the net proceeds when they shall 
exceed a certain amount. 

Mr. Jones. Have you prepared anything embodying that idea? 

Secretary Taft. Nothing except this: 

The guaranty to be in such form and under such provisions concerning repayment 
of any sum paid thereunder as the said Government shall deem to be to the public 
interest. 

It leaves it to the Commission, in other words. 

Mr. Jones. That leaves it to the Commission to say whether it shall 
pay anything' back or not? 

Secretary Taft. Yes, sir; it does, and it leaves it to the Commission 
to make a perpetual guaranty, if they would. Under many of the 
guaranties in England this was the form taken: 

The Government convej^ed the land to the railroad for the construc- 
tion of the road on a 99-year term with a provision of a reverter at 
the end of ninety-nine years, provided that the Government should 
pay at that time the cost of the equipment and the rolling stock at the 
end of ninety-nine years. Before that time, if the company saw fit, it 
had the right to demand of the Government that it should pay to the 
company all the mone^^ that it had invested. 

The Chairman. The roads in India paid during the last year, as 
I understand, an income of 5 per cent? 

Secretary Taft. I believe they have. There are 27,000 miles of 
road there. Of course, they have a much larger population than we 
have, and of course the necessity and opportunity^ for railroad build- 
ing are very much greater than with us. " This plan would contem- 
plate not more than 1,000 miles of railroad. 

The question of 1 per cent or 5 per cent is a question of discretion 
with the Commission and what the committee is willing to leave in the 
discretion of the Commission. While I should like to have it 5 per 



72 STATEMENT OF HOIST. WILLIAM H. TAFT, SECRETARY OP WAR. 

cent, I should not feel discouraged if the discretion was limited to 4 
per cent. In other words, I want to be as frank as I can be with the 
committee. 

I should hope that we might get some of the roads built on a 3 per 
cent guaranty, and others without any guaranty at all. I do not 
think the Commission, as at present constituted certainly, is likely to 
waste the money of the Government, because this guaranty is coming- 
right out of the treasury which they are constantlj^ spending money 
from. 

The Chaieman. It is your opinion, Mr. Secretary, that some por- 
tions of these proposed lines would be remunerative in the near future ? 

Secretary Taft. Yes, sir. For instance, the road running from 
Legaspi through these mountains [indicating on map] up here [indi- 
cating on map] to Pasacao, a distance of possibly 85 or 90 miles, ought 
to be remunerative from the time they begin to haul freight. Of 
course, if you guarantee a road that begins to pay your guaranty is 
not expensive. 

The Chairman. What other lines do you think would pay in the 
near future? 

Secretary Taft, I think the line from Manila down to Batangas 
would probably pay, and the line along the south of Laguna de Bay 
would probably pay. 

The Chairman. How long, approximately, are those lines in the 
aggregate 'i 

Secretary Taft. Fifty or 60 miles. I am quite sure, though Mr. 
Higgins, who runs the Manila-Dagupan road, doubts it that this line 
would pa}^ from Dagupan to Laoag on the west coast. 

The Chairman. What is the approximate length ? 

Secretary Taft. One hundred miles; perhaps 120 miles. 

The Chairman. Is that locality thickly settled? 

Secretary Taft. Yes, sir. It is a narrow strip, but very thickly 
settled. 

Mr. Olmsted. What would be the particular traffic? 

Secretary Taft, Tobacco and rice. One of the great objects to be 
obtained by railroad traffic in the islands is the distribution to the 
islands of food stutfs — of rice, for instance. A great deal of the inter- 
island traffic is in rice. It is incorrect to say that the islands suffer on 
the whole from a lack of intercommunication — I mean inter- Archipelago 
communication— because, as Judge Crumpacker pointed out, nature has 
provided a cheaper kind of transportation by sea. The only difficulty 
is, as I explained to Mr. Jones a little while ago, that the harbors are 
not many, and six months in the year the harbors on one side are not 
available, and then the rest of the year the same conditions exist as to 
the harbors on the other side. 

I have, Mr. Chairman, a number of communications, personal to 
me, with respect to this matter, and I would prefer that they should 
not be made public, but 1 shall be glad to submit them to the Com- 
mittee if the}^ could be I'egarded as confidential, showing the attitude 
of gentlemen who are likely to invest in the roads, so the Committee 
could get the same view of the matter I have. 

The Chairman. If jou leave them with the clerk of the Committee 
we will have the Committee examine them in executive session and 
treat them as confidential. 

Secretary Taft. Very well; I shall be glad to do so. 



STATEMENT OF HON. WILLIAM H. TAFT, SECEETAEY OF WAE. 73 

Mr. Williams. What per cent of the 1,000 miles you think should 
be built would be paying roads within the near future ? 

Secretary Taft. I should think perhaps 30 or 40 per cent. The 
road which will not pay and which is the most important to construct, 
and which is probably the most expensive, is the road from Manila 
north through Caravallo Pass down to Aparri, on this river [indicating 
on map the Cagayan]. 

Mr. Williams. A very fertile country ? 

Secretary Taft. Yes, sir; but one thinl}^ populated. 

Mr. Williams. If the Commission has the power to make these 
guaranties, will it not be more difficult to get the railroad companies 
to build any of those lines without a guarantj^? In other words, if 
they know the Commission has the power to grant the guarant}^, will 
the}^ not go after all of it? 

SecretarjT^ Taft. I think so. On the other hand, those they can 
construct without a guaranty the guaranty on will not be very burden- 
some. I do not know that I make m3^self clear. 

Mr. Williams. Yes, sir. 

Secretary Taft. A guarantj^ on a road that will pay is not a very 
heavy obligation. 

The Chairman. If 30 per cent of these roads would be remuner- 
ative within the near future, what, then, would be the total annual 
burden on the insular treasury on an investment of, say, $30,000,000? 

Secretary Taft. That would depend on the percentage. If 33 per 
cent, it would be 6 per cent on 120,000,000, and that would be $1,000,000 
a year. That assumes, however, that the other roads do not pay any- 
thing. It would hardly pa}^ to build all the roads at once, as Colonel 
Edwards suggests; they ought to be built within three or four years' 
time. If they were all built at once, it might interfere somewhat with 
the supply of labor. 

The Chairman. In your opinion it is the most important improve- 
ment suggested for the Philippine Islands? 

Secretary Taft. Yes, sir; I do not know anything that compares 
with it. Of course I yield to no one in my hope and expectation of 
the educational s}' stem that we have in the islands, but intercommuni- 
cation is educational. It would have been impossible to have this sep- 
aration of dialects had there been a comprehensive railroad system 
through the islands. It is a part of an educational system; that is 
what it is. 

The Chairman. If those people are ever to be unified, something of 
this kind is absolutely essential? 

Secretaiy Taft. Yes, sir; it would create a much better condition 
than now exists, and I am quite sure it would aid very much in the 
preservation of good roads. What I mean is that it would relieve 
the trunk lines of a great deal of carriage and would enable, with less 
expense, the provinces and municipalities to take care of the roads 
which they have. 

Mr. Crumpacker. How are the islands supplied with telegraph and 
cable lines ? 

Secretary Taft. It is possible from Manila to communicate by tele- 
graph with the capital of every province in the islands and with 
every important town. I do not mean to say that" it is as perfect a 
communication as it might be, because we are in a transition period. 
We are transferring from the military to the civil government the 



74 STATEMENT OF HON. WILLIAM H. TAFT, SECRETARY OP WAR. 

maintenance and supervision of those lines, and we are engaged in 
educating native operators to take English messages, and that has 
proven to be a somewhat longer task than we anticipated. It will 
probably take two or three years, but it is going on graduallj^ That 
is a verj^ great advantage in the government of the islands. We are 
kept in close touch with the governor of every province. I do not 
suppose the gentlemen of the committee can quite realize the enor- 
mous difficulties of governing 3,000 islands, communication between 
which is interrupted as much as it is between these islands by storms 
and monsoons. I mean by mail. 

The auditor of the islands is at times in a perfectly discouraged and 
hopeless condition because of the length of time it takes him to com- 
municate with treasurers and disbursing officers and receiving their 
reports and criticising their reports and getting them back again, but 
that difficulty is more or less relieved by the speed with which the 
executive head can communicate with any officer. We can relieve the 
officer if he proves to be too slow in his accounts by telegram, and so 
orders of that sort can be executed very promptly; but orders that 
depend on the mail — accounts and things of tliat sort— are exceedingly 
slow. 

Mr. Ceumpackee. The government controls and operates the cable 
and telegraph lines? 

Secretary Taft. Yes, sir. There is cable communication, or at least 
there ought to be, if it is not to be interrupted by breaking cable, clear 
to Jolo, around this way [indicating on map]. We reach every point 
from Manila. The last cable that is being laid is the cable from 
Legaspi to Catauduanes, and there is one cable that has not jet been 
laid out to this island, Paragua [indicating on map]. We do reach the 
island of Cuyos by the cable there [indicating on map], and that island 
contains the capital of Paragua. Therefore what I say is true, that 
we reach the capital of every province, .but when the capital is moved 
to this island, Paragua [indicating on map], a cable will have to be built 
there, and that will cost $75,000 at least. 

Mr. Robinson. I called your attention the other day to the white 
inhabitancy of the islands and then referred to the tropical nature of 
the country, the health conditions, and the climatic conditions, and I 
would like to have j^our opinion as to the white inhabitants and their 
future prospects. 

Secretary Taft. The climate of the Philippine Islands is tropical, 
and in all tropical countries white labor is impossible. I mean labor such 
as the tropical labor is capable of. As a consequence, I do not think 
any white labor, unless it be very highly skilled labor, will ever be 
attracted to the islands. Those who go to the islands Avill go for 
business; go there to supervise investments; go there to be in the Gov- 
ernment, and not go there for manual labor. 

That, I think, should limit the number of Americans who go to the 
islands outside the civil service and the military service to 20,000 or 
30,000. I should doubt if it ever exceeded that. It is not true that 
the islands are unhealthf ul, as India may be said to be, because the 
heat in the islands rarel}^ equals what it is in India. You talk to an 
old Indian — I mean an Englishman who has been a long time in India — 
and he will tell you that in most parts of India it is absolutely essen- 
tial that you should have a punka, which is a fan suspended f-rom the 
ceiling to keep the air moving. 



STATEMENT OF HON. WILLIAM H. TAFT, SECRETARY OF 'WAR, 75 

You can not sleep in most of the lowlands of India without a punka, 
so that the Indian servant who sits outside of the bedroom and pulls 
the rope and pulls the punka all night is an essential part of 3"our 
household. In Manila, while they do have sometimes electric fans and 
sometimes a punka at the dining-room table, we never had a punka 
^11 night. It is an institution that is not known there. The islands 
are wind swept both ways, and it is perfectly possible to live there for 
three or four years at a stretch, if you obey the laws of hygiene and 
take the exercise you ought to take, and remain healthful. At the end 
of that time it is wise, because of the strain on your nervous force, to 
take a term of three or six months in the temperate zone. I know I am • 
impeached as a witness because I was ill twice in the islands, but I took 
a family of children, a baby 2 j^ears old, a girl 8 years of age, and a 
boy 10 years old, and they were there for four years, with the excep- 
tion of a trip to the United States, and they did not have a day's illness 
.while there, 

Mr. Robinson. You were on the seacoast? 

Secretary Taft. We were in Manila. I think Manila is rather more 
healthful than the interior. There are places in the islands so malari- 
ous as to be dangerous. 

Mr. Robinson. You have the bubonic plague? 

Secretary Taft. No, sir; very little. 

Mr. Robinson. Smallpox and cholera, how do they interfere with 
the islands? 

Secretary Taft. There was a cholera epidemic in 1883. There was 
a cholera epidemic between that time and 1902. I do not think there 
have been more cholera epidemics in the Philippine Islands than in the 
United States. The one in 1883 was due to the impurity of the water. 
The death rate in Manila reached 1,000 a da}^ This time, in 1902, it 
did not exceed 100, and was ordinarily as low as twenty or thirty. So 
far as the bubonic plague is concerned, that is practically stamped out 
by the system of rat killing that has been inaugurated, and they have 
not had much of it in the islands for two or three years. 

Mr. Robinson. Kindly give us an estimate of the number of lepers 
in the islands. 

Secretary Taft. There was an estimate by Doctor Maus, who was at 
the head of the health department, of 20,000, but the subsequent 
investigation shows that that number probably will have to be reduced 
to 10,000 and perhaps less than 10,000. 

Mr. Robinson. Will the islands be anything more than large plan- 
tations? 

Secretary Taft. I doubt if manufactures will be introduced in an}^ 
great way there. It is possible. They have now quite extensive cigar 
factories and then there are towns where there is a good deal of manu- 
facturing — the manufacture ol: furniture and hats, textile fabrics, etc. 

Mr. Needham. Are not the woods valuable enough to induce manu- 
facture ? 

Secretary Taft. The woods are beautiful and they are valuable 
when you get them out. The great difficulty about the woods of the 
Philippines is that the most valuable of the woods do not grow in 
groves. They are to be found in groves of other growths and the 
cutting of them and the pulling of them out, they are so heavy and 
usually far removed from the places for easy transportation, makes 
them quite expensive to get, but there is a great deal of very valuable 



76 STATEMENT OF HON. WILLIAM H. TAFT, SECEETARY OF WAR. 

wood there and as the machinery for dragging the wood out is 
improved and the intercommunication in the islands is improved, of 
course, the woods will be brought nearer to the market and it will be 
very mucli easier and cheaper to bring the woods to the United States. 
There are inferior classes of wood, quite as good as our soft woods, 
which can probably be used there for construction. However, the 
white ant is likely to eat the softer grades of wood. 

Mr. Needham. Is not the soil suiEciently fertile to induce farming 
in small holdings ? 

Secretary Taft. Yes, sir. You have allowed the Filipino 40 acres. 
I think 40 acres is more than he needs to cultivate to support his family. 

Mr. Needham. Why should there be large plantations? 

Mr. KoBiNSON. Would it not be in large plantations worked by 
corporations ? 

Secre'tary Taft. That depends upon what the cultivation is. In 
sugar, that is true. 

Mr. Needham. That is true in all countries whera sugar is raised ? 

Secretary Taft. Yes, sir; but I presume in tobacco land, and I 
rather think in rice land after we get the friar lands distributed, there 
will be more small farmers than in any other population of the same 
size in the world. 

Mr. Needham. Can not they raise tropical fruits, like oranges? 

Secretary Taft. Yes, sir. There are some provinces where there 
are large plantations. In many provinces the hemp, the cocoanut, and 
the rice plantations are cultivated in srfiall holdings. A man works 
for five or six years planting his cocoanuts; he gets 4 or 5 hectares — 10 
or 15 acres — and he sits in his house and collects at the end the rent for 
the trees. In Tayabas there are so many small holdings by the poor 
people of cocoanut groves from which they get enough to live on that 
workmen in that province are very hard to get. In Batangas, where 
the land is owned b}^ large landowners and the people are more or less 
agricultural laborers, it is easy to get labor. I would not say, there- 
fore, that the tendency will be in the Philippine Islands to the owner- 
ship of large plantations, except in those islands where the cultivation 
of sugar is the chief product. 

The Spanish Government owned a monopolj^ in tobacco, especially 
in the Cagaj^au Valley, to which I have referred, and the}^ farmed out 
their lands, and when thej^ concluded that they would give up the 
monopoly they sold the lands to the tenants, and in the valley there is 
a very large number of small tobacco-land owners. So with respect 
to hemp, because hemp grows so easily the number of land owners in 
hemp is very large. If you will refer to the census, which will be out, 
I hope, in October next, I think you will find the number of small land 
owners in the Philippine Islands exceeds that in most countries. 

Mr. PoBiNSON. Have you in mind the population of the Philippines 
and the square miles? 

Secretary Taft. I can give you the figures. The square miles are 
120,000, and the population is, in round numbers, 7,500,000. 
. Mr. Williams. That is about 60 to the square mile? 

Secretary Taft. Yes, sir; that is about it. 

The Chairman. Will 3^ou please tell us what you meant a few 
moments ago, when j^ou said that although we allowed the Filipino 40 
acres of agricultural land he would not be able to cultivate it? 

Secretary Taft. I me^ntthat he would be able to I'aise, on consider- 



STATEMENT OB^ HON. WILLIAM H. TAFT, SECRETARY OF WAR. 77 

ably less than 40 acres, enough to support himself and his family. 
That is what I meant. 

Mr. Williams. What is the character of investments in the islands 
being- made by Americans? 

Secretary Taft. Practically none, except there are about $2,500,000 
or perhaps 13,000,000 invested in a street railway in Manila. 

Mr. Williams. Are any lands being collected? 

Secretary Taft. I do not know of a single investment in land by 
Americans. They may be awaiting the sale of public lands. I believe 
probably they are. You see we have submitted to Congress, under 
the Philippine act, the land regulations which will go into effect if 
Congress takes no action, and until they go into eii'ect it is a little diffi- 
cult for me to say how many Americans will invest there. 

Mr. Williams. You have not sold any of the lands yet? 

Secretary Taft. No, sir. 

Mr. Crumpacker. What about the shipbuilding industry in the 
Islands? Are there shipyards? 

Secretary Taft. One or two, 37^es, sir; but of limited size and capacity. 
I think I said the other day that we attempted to encourage them by ask- 
ing the privilege of bringing in Chinese shipwrights to teach the 
Filipinos the ship-making business. I suppose it will grow, but every- 
thing is so much more expensive in the Philippines than it is in Hong- 
kong and Shanghai that a vessel which plies between the ports has its 
repairing done in the Chinese ports and not in the Philippines. 

Mr. Robinson. The system of subsidy the Government adopted out 
West was the checker-board system? 

Secretary Taft. Yes, sir. 

Mr. Robinson. Would it be practicable to increase the value of the 
reserve by land subsidj^; that same system? 

Secretary Taft. It possibl}^ might, I think. Along the lines where 
the railroads are to run there is a great deal of private ownership. I 
am not sure we are right in thinking that we ought to avoid the land- 
grant sj^stem, but we thought it was better for the Government to 
know how much it was being made liable for. Still, it might increase 
the value of the Government land which is retained. You know there 
are about 75,000,000 acres of land in the Philippines, and of that num- 
ber certainly 60,000,000 acres belong to the Government. 

Mr. Robinson. We could know by a land subsid}^ what our limit was ? 

Secretary Taft. Yes, sir; of course, you could know how much 
land you would allot. 

Mr. Needham. Do the natives claim any of these public lands ? 

Secretary Taft. The Dattos claim land in the Moro country, but no 
other tribes. Among the Filipinos there is nothing except the claims 
by squatters, and that we attempted to recognize in the laws that we 
have submitted to you for approval. 

We are exceedingly anxious, if possible, to begin the railroad busi- 
ness. The sooner we begin it the more quickly the islands will 
respond to our efforts at development. I do not know anything that 
would so improve the condition of the people as the general spread of 
railroad communication in the islands. 

Mr. Needham. Are the people generally pretty well satisfied with 
American occupation? 

Secretary Taft. I think they are. Of course they are an oriental 
people and they are disposed to be courteous and polite, and you have 



78 STATEMENT OF HON. WILLIAM H. TAFT, SECRETARY OF WAR. 

to discount a little in taking what they say from what your opinion 
would be if you were dealing with an Anglo-Saxon people, but I think 
it not too much to say that they seem to be satisfied from the begin- 
ning, and believe more in our desire to aid them. I have elsewhere 
alluded to the attitude of some of the Americans who are in the islands 
engaged in business of hostility toward the Filipinos. I think I said 
that the}^ were originally dependent for their profits on what the Army 
bought and that they shared the natural hostility of the soldiers 
toward the Filipinos who were fighting them, and that has continued 
down to the present da}^ 

It has put the Government in opposition to that class of Americans 
and has brought them very much in sympathy with the Filipinos, and 
the Filipinos have responded, as is quite natural. The idea was spread 
among the Americans when I left the islands to Governor Wright that 
there was going to be a change in policy under him, and it was going 
to be a stitfer American policy. Governor Wright has in his inaugural 
address removed any such idea, and the expressions in the Filipino papers 
since his inaugural address say they are ver}?- well satisfied with the 
government as it is. I do not mean that they have not aspirations and 
ambitions for an increase in the voice which the people have in the gov- 
ernment. They are looking forward with eagerness to the establish- 
ment of a popular assembly, but I think they are convinced of the 
sincerity of the desire on the part of the government to do them good. 

Mr. Jones. Many of them are looking forward to absolute independ- 
ence ? 

Secretary Taft. A number are looking forward with the hope they 
may have independence. 

Mr. Warnock. I gather from what you say that a native Filipino 
has not much desire to acquire land outside of his immediate wants. 
You say if he had 40 acres he would not use it? 

Secretary Taft. I do not mean that the native Filipino does not 
like land. I think he does; but what I meant to say was that 40 acres 
could considerably more than furnish to himself and his family enough 
to live on. 

Mr. W^ARNOCK. I got the impression that he would sit down and 
loaf. 

Secretary Taft. He is a philosopher; he does not believe in working 
too hard. 

Mr. Warnock. Has he a disposition to acquire lands ? 

Secretary Taft. I do not think he is nearly as hungry for real estate 
as the Anglo-Saxon. However, a landowner has a little more social 
position, and he has been taught by the Spaniards to value that. 

Mr. Warnock. Are there many of them who own large tracts? 

Secretary Taft. Yes, sir; some Filipinos are large landowners. 

Mr. Warnock. Still they only own about 15,000,000 acres? 

Secretary Taft. 1 should think that was too high; possibly 10,000,000. 
The estimate given in the Land OflSce is 5,000,000, but 1 estimate, 
with squatters and their possessory rights that will ripen into private 
ownership, it will reach 10,000,000, and possibly 15,000,000. 

Mr. Warnock. There are 30 of the governors of provinces? 

Secretary Taft. Thirty-eight, 1 think it is. 

Mr. Warnock. Are any of them native Filipinos ? 

Secretary Taft. All; there may be two American governors left, 
but I think that is all. 



STATEMENT OF HON. WILLIAM H. TAFT, SECRETARY OP WAR. 79 

Mr. KiNKAiD. What proportion of the judc^es of the courts of the 
first instance are natives? 

Secretary Taft. About one-third. I think there are 7 native judges 
and 14 American judges in courts of the first instance, and there are 
3 native judges and -i American on the supreme court. 

Mr. KiNKAiD. The ministerial officers, the sheriffs — I do not know 
what you call them — and those officers are all natives? 

Secretar}^ Taft. Yes, sir. The supervisor of works in a province 
and the treasurer are usually Americans. The other officers — the gov- 
ernor, who is elected, the prosecuting attorney, secretary or clerk of 
the provinces — are all natives. 

Mr. KiNKAiD. Do 3"ou look forward with a good deal of confidence 
at the Filipino part of the legislative assembly — that they will make 
successful legislators in cooperation with the Commission ? 

Secretary Taft. I think so, but of course they will need educa- 
tion. I have no doubt 25 per cent of them, when they become legisla- 
tors and become members of the assembl^^, will propose acts for the 
regeneration of mankind and schemes of universal salvation, but to 
come down to the practical business, it may need some years of education. 

Mr. KiNKAiD. The greatest benefit will be that it will teach them 
the art of legislation ? 

Secretar}^ Taft. Yes, sir; that is the very use of the popular legis- 
lation. I am sure it will tend greatly to their political education. It 
will tend greatly to teach them the difference between political theories 
and actual practical government. 

Mr. KiNKAiD. The waj' to qualify them for self-government is to 
have them participate to the greatest possible extent right along? 

Secretary Taft. Yes, sir; that is our theory. 

Mr. Warnock. Are the local taxes assessed by the natives? 

Secretary Taft. Yes, sir; within the limits fixed by law. That is, 
a provincial board is authorized to levy a tax not exceeding three- 
eighths of 1 per cent on all the lands in the province. The municipal, 
council is authorized to levy taxes not exceeding one-half of 1 per cent, 
making a limit of land taxation in the countrj^ not exceeding seven- 
eighths of 1 per cent. 

Mr. Warnock. Have they no other taxes? 

Secretary Taft. There is a local license, or business tax, that they 
are authorized themselves to levy. That is what is called an indus- 
trial tax. That came from the Spanish regime. 

Mr. Williams. How many American soldiers are there in the 
islands now? 

Secretary Taft. Fifteen thousand soldiers; about 5,000 scouts; those 
are native soldiers in the United States Army, and about 6,500 constabu- 
lary, native policemen under the insular government, and by a con- 
stabulary act which was passed last winter we have been able to use 
the scouts in connection with the constabulary. 

The Chairman. They are all Filipinos — both the constabulary and 
the scouts ? 

Secretary Taft. Yes, sir. 

Mr. KiNKAiD. Is the constabulary included in the 15,000 soldiers? 

Secretary Taft. No, sir; there are 15,000 white soldiers in the 
archipelago. 

Mr. Warnock. There is considerable home rule there after all? 

Secretary Taft. Yes, sir. We just had an election and I had a 



80 STATEMENT OF HON. WILLIAM H, TAFT, SECRETARY OF WAR. 

letter from General Wright sa3'ing that judg-ing b}^ the protests and 
contests of elections our brown brother was acquiring knowledge as to 
how elections should be carried with an adaptability^ that was quite 
Anglo-Saxon. 

I would like to submit the bill as a whole, if I may, amended as I 
recommend, with perhaps a comment on each section to show the 
necessity for its adoption or the reason why we think it should be 
adopted. 

Mr. Smith. Do 1 understand that you offer as a substitute for sec- 
tion 4 that which j^ou have read ? 

Secretary Taft. Yes, sir. 

Thereupon the committee adjourned to meet to-morrow, Thursday, 
March 24, 1904, at 10.30 o ciock a. m. 



Committee on Insular Affairs, 

Thursday, March "2Jp, 1901^. 
The committee met at 11 o'clock a. m., Hon. Henry Allen Cooper 
in the chair. 

STATEMENT OF HON. WILLIAM H. TAFT, SECRETAEY OF WAE— 

Continued. 

The Chairman. Mr. Secretaiy, we are prepared to hear you. 

Secretary Taft. Shall I read the bill as I have prepared it? 

The Chairman. Yes, sir. 

Secretary Taft. I had hoped to have time to prepare a written 
memorandum, which I will send later, because getting the bill itself 
into shape has taken up all the time I have had. The title of the bill 
will have to be changed, I think, because of the amendment of two or 
three other acts. 

A bill to amend the act approved July 1, 1902, entitled "An act temporarily to 
provide for the administration of the affairs of civil government in the Philippine 
Islands, and for other purposes," and to amend an act approved March 8, 1902, 
entitled "An act temporarily to provide revenue for the Philippine Islands, and for 
other purposes," and to amend an act approved March 2, 1903, entitled "An act to 
establish a standard of value and to provide for a coinage system in the Philippine 
Islands, and to provide for the more efficient administration of civil government in 
the Philippine Islands, and for other purposes." 

I believe there is no constitutional requirement that you should put 
in everything that is in the act. 

Mr. Needham. That only applies to the State government? 
Secretary Taft. Yes, sir. 

The Chairman. It is much better to have it in, though ? 
Secretary Taft. Yes, sir. 

Be it enacted by the Senate and House of Representatives of the United States of America 
in Congress assembled, That all bonds issued by the government of the Philippine 
Islands or by its authority shall be exempt from taxation by the Government of the 
Uiiited States, or by the government of the Philippine Islands or any political or 
municipal subdivision of said islands, or by any State, county, municipality, or other 
municipal subdivision of the States and Territories of the Union and the District of 
Columbia. 

That is in accordance with Judge Crumpacker's suggestion. 

Sec. 2. That for the purpose of providing funds to construct port and harbor 
works, bridges, roads, buildings for provincial and municipal schools, court-houses, 
penal institutions, and other public improvements for the development of the Philip- 
pine Islands by the general government thereof, the government of the Philippine 
Islands is authorized to incur indebtedness, borrow money, and to issue and sell (at not 
less than par value in gold coin of the United States) registered or coupon bonds in such 
amount and payable at such time or times as may be determined by said government 
of the Philippine Isjands, with interest thereon not to exceed five per centum per 
annum: Provided, That the entire indebtedness of the government of the Philippine 
Islands created by the authority conferred by this section shall not exceed at any one 
time the sum of ten millions of dollars: And provided further, That the law of the 
Philippine government creating the indebtedness and authorizing the issue of the 
bonds under this section shall be approved by the President of the United States. 

I A— 04 6 81 



82 STATEMENT OF HON. WILLIAM H, TAFT, SECRETARY OF WAR. 

Gentlemen, of course this 5 per cent I have just put in as it was 
originallj'^, subject, of course, as all this is, to the wishes of the com- 
mittee. As to whether it should be $5,000,000 or 110,000,000, 1 should 
prefer $10,000,000 because it gives more scope, but $5,000,000 will 
serve all immediate purposes. Then I have put in the President of 
the United States, because it seems to me that it is better to have the 
sanction of some person who is not directly in the Philippine govern- 
ment for the issue of bonds, and for the convenience of bondholders 
other than the Secretary of War, who is a part of the Philippine 
government under the present arrangement. This requires the Presi- 
dent of the United States^ which is an additional requirement over and 
above what it would be were it a mere law of the Philippine Islands. 
I think the bonds for the friar lands were 4.5 per cent. We sold them 
at 4 per cent, but the limit in the law was 4.5 per cent. 

Mr. Williams. Do you not think this proviso would require a com- 
plete history of the issue of the bonds to be submitted to the President 
for his approval, because he is not to approve the authority, but the 
issue of the bonds ? 

Secretary Taft. Yes, sir. 

Mr. Williams. You think that is best? 

Secretary Taft. Yes, sir; 1 think it is wise. 

Mr. Williams. If he should pass on that and his judgment should 
be wrong, do you think the United States Government would be liable ? 

Secretary Taft. No, sir. 

Colonel Edwards. It would give the bonds a better commercial 
value. 

Mr. Williams. But it would put them under a greater moral obli- 
gation than if he did not? 

Secretary Taft. I am not sure. It depends upon whether the 
authority given by the Secretary of War imposes any less moral obli- 
gation than the President of the United States; possibly it does. 

Mr. Robinson. But the bondholders would be glad to have the 
stamp of approval on the bond itself. 

Secretary Taft (reading) : 

Sec. 3. That section sixty-six of the act of Congress approved July first, nineteen 
hundred and two, entitled "An act temporarily to provide for the administration of 
the affairs of civil government in the Philippine Islands, and for other purposes," is 
hereby amended to read as follows: 

"Sec. 66. That for the purpose of providing funds to construct sewers, to furnish 
adequate sewer and drainage facilities, to secure a sufficient supply of water, and to 
provide all kinds of municipal betterments and improt'ements in municipalities, the 
government of the Philippine Islands, under such limitations, terms, and conditions 
as it may prescribe, with the consent and approval of the President of the United 
States, may authorize and enable, by appropriate legislation, any municipality of 
said islands to incur indebtedness, borrow money, and to issue and sell (at not less 
than par value in gold coin of the United States) registered or coupon bonds, in such 
amount and payable at such time as may be determined by the government of said 
islands, with interest thereon not to exceed five per centum perg,nnum: Provided, 
That the entire indebtedness of any municipality shall not exceed five per centum 
of the assessed valuation of the property in said municipality, and any obligation in 
excess of such limit shall be null and void. ' ' 

This section is exactly as it was before, except ii reads "with the 
consent and approval of the President of the United States" instead 
of "with the consent and approval of the Secretary of War." It is 10 
per centum, but vay impression is the committee thought it should be 
be reduced to 5 per centum. 



/ 



STATEMENT OF HON. WILLIAM H. TAFT, SECRETARY OF WAR. 83 

The next section is section 4, which is the railroad section. I have 
had some other railroad sections prepared for the choice of the com- 
mittee. 

Sec. 4. For the purpose of aiding in the construction, maintenance, and operation 
of railroads in the Philippine Islands, the Philippine government is authorized to 
guarantee an income of not exceeding five per centum upon capital invested in the 
construction and equipment of such railroads or any part thereof, the guaranty to be 
in such form and under such provisions requiring repayment of any sum paid there- 
under as the Philippine government shall deem to be to the public interest, and the 
act making the guaranty shall declare the proper rules for ascertaining clearly tHe 
capital actually invested in said railroads and the net income actually received on 
the capital so invested and shall set forth the limit of invested capital to which said 
guaranty shall apply, and shall provide for government supervision of the conduct 
of the finances of the road and its location, construction, and maintenance, as well 
as by the presence in the board of directors of two or more government directors, the 
number and manner of their selection to be determined by law, as also by such 
further supervision through the auditing, engineering, and railroad bureaus of the 
Philippine government as the public interest shall require. The said guaranty may 
be made in the form of a guaranty of interest on bonds or of income on preferred or 
common stock, or in such other form as may be determined by the Philippine gov- 
ernment, and shall be made on such other terms and conditions as the Philippine 
government shall approve: Provided, however, That the total annual contingent 
liability of the Philippine government under the guaranties authorized by this section 
shall not at any time exceed the sum of one million five hundred thousand dollars. 

Section 5 is a new section and is simpty inserted as an alternative: 

Sec. 5. In case the Philippine government shall find itself unable to secure the con- 
struction, equipment, and maintenance of any railroad which the public interests shall 
require, upon terms satisfactory to the said government, under the provisions of the 
preceding section, then and in that event it may issue and sell bonds of said govern- 
ment at not less than par, to an amount not exceeding thirty million dollars United 
States currency, and with the proceeds thereof may proceed to construct the needed 
railroads or any part thereof according to plans and specifications approved by said 
government: Provided, Jioirever, That if any roads are constructed under guaranties 
authorized by the preceding section, then the limit of bonds which may be issued 
hereunder for the government constructions of such railroad or railroads, shall be 
reduced by the amount of the principal, the income on which has been guaranteed. 

In other words, if there are guaranteed railroads to the extent of 
the income on $15,000,000, this limits the right to construct railroads 
to the other $15,000,000, that is less than $30,000,000, assuming that 
the $1,500,000 in the preceding section was the guaranty of an income 

on $30,000,000— 

The bonds authorized hereunder shall be registered or coupon bonds of said 
Philippine government for the amounts herein authorized, the said bonds to be in 
denominations of fifty dollars or any multiple thereof, bearing interest at the rate of 
not exceeding five per centum per annum, payable quarterly, and to be payable at 
the pleasure of said government after dates named in said bonds, not less than ten 
nor more than forty years after the dates of their issues, together with the interest 
thereon in gold coin of the United States of the present standard value or theeqiiiv- 
alent in value of money of said islands. The moneys which may be realized or 
received from the issue and sale of said bonds shall be applied by the government of 
the Philippine Islands only to the construction, equipment, and maintenance of rail- 
roads in this section authorized, including the acquisition of such real estate as may 
be necessary therefor. 

Sec. 6. The Philippine government having constructed at its own expense railroads 
under the provisions of the foregoing section, is authorized to lease the same to 
responsible lessee or lessees for a period not exceeding fifty years, upon such terms 
and conditions as may be approved by the Philippine government and the President 
of the United States. 

Now, gentlemen, I have said that so far as I am concerned, and so 
far as the Philippine Commission is concerned, we do not ask the right 
to construct government railways. I do not think it would be wise. 



^ 



84 STATEMENT UF HON. WILLIAM H. TAFT, SECKETARY OF WAR. 

I think it would be wiser to have them constructed by private enter- 
prises with the guaranty, but I put this section in as an alternative, 
because the committee may think differently. 

Mr. Jones. Do you not think that if the Philippine government 
should construct these railroads they should operate them and not 
lease them 'i 

Secretary Taft. It is possible. 

Mr. Jones. If they are going into the railroad business, do you not 
think they should operate them, too'^ 

Secretary Taft, I want to keep out of that as much as possible. 

Mr. Needham. Is not that a wise provision to put in, even if- jou. 
do not exercise an}^ authority under it? 

Secretary Taft. Yes, sir; I thihk we ought to have the right to 
lease. 

Mr. Needham. Because that will probablj" induce capital to come 
there. 

Mr. Crumpacker. I no not believe in that plan at all. 

The Chairman. England built some of her railroads in India? 

Secretary Taft. She built over half of them. I think probably 
about a third were built under a guarantee and the rest as government 
roads. 

The Chairman. She has never in England built any Government 
railroads ? 

Secretary Taft. No, sir. Nearlj- all the railroads on the Continent 
are owned by the governments. 

The Chairman. But none in England? 

Secretary Taft. I do not think so. I do not think it is a wise policy 
myself, and I think it will increase the patronage of the government 
in the Philippine Islands so largely that it would not be wise. 

Mr. Needham. The question of patronage there is a more difficult 
question than here? 

Secretary Taft. Yes, sir; and can be much better managed by a 
private corporation. Colonel Edwards suggests that there is an exam- 
ple of government construction in the rapid transit in New York. 
There the city, or the rapid transit commission, under State legislation 
issues bonds and constructs the subway, and then leases the subway to 
an operating railway. We have done the same thing in Cincinnati. 
We constructed a railway from Cincinnati to Chattanooga, and now it 
is leased to a railway corporation that is running on a lease of a long 
term of years — fifty, I think. 

Mr. Needham. Is that profitable to the city? 

Secretary Taft. It is now; yes, sir; though I would not recommend 
it as a general business for cities. 

Mr. Warnock. They had a big struggle for many years? 

Secretary Taft. Yes, sir. 

Mr. Warnock. I think Italy built all her railroads and leases them? 

Secretary Taft. I am not sure. The Cincinnati railwaj^ was in the 
hands of a receiver when I was on the bench, for seven years; but we 
paid the debts and turned it back to the leasing company. 

I simply tender that section to the committee for its consideration. 
Personally, I should be entirely content with section 4 as it is, added 
to the provisions contained in section 7, to wit: 

"Sec. 7. The Philippine Government may, in its discretion, admit 
material imported for the construction and equipment of railroads to 

A 



STATEMENT OF HON. WILLIAM H. TAFT, SECRETAEY OF WAR. 85 

be constructed in said islands either under section 4 or section 5 hereof 
to free entr}^ as material imported for the use of the Philippine gov- 
ernment,''' making section 4 applicable not only to steam railwaj^s, 
but electric railways. Until we can get railroads in the islands which 
will run to the forests it will be probably cheaper to import wood from 
Austrailia that the white ant does not affect as it lays under the rail. 

Sec. 8. That the immigration laws of the United States in force in the Phihppine 
Islands shall be administered by the officers of the Philippine government designated 
by appropriate legislation of that government, and all moneys collected under said 
laws as duty or head tax on alien immigrants coming into the Philippine Islands 
shall not be covered into the general fund of the Treasury of the United States, but 
shall be paid into the treasury of the Philippine Islands, to be used and expended for 
the government and benetit of said islands. 

That section is just as it was in the printed bill. 
Mr. Jones. Section 5 in the printed bill? 
Secretar}^ Taft. Yes, sir. 

Sec. 9. That the government of the Philippine Islands is hereby authorized to pre- 
scribe the compensation for the chief justice and associate justices of the supreme 
court of the islands, not to exceed ten thousand five hundred dollars for the chief 
justice and ten thousand dollars for each associate justice per annum. 

You suggested, Judge Crumpacker, 110,000, but I think it would be 
wiser to make a little distinction between the salary of the chief justice 
and the others. 

Whenever by reason of absence or disability of any judge of the supreme court or 
l)y reason of vacancies occurring therein, a quorum of the court shall not be present 
for business, the civil governor of the Philippine Islands is authorized to designate a 
judge or judges of the court of first instance in the islands to sit and act temporarily as 
a judge or judges of the supreme court in order to constitute a quorum of said supreme 
court for business. If a judge so designated shall not have his usual place of resi- 
dence at the city of Manila he shall be allowed his travelling expenses from his usual 
place of residence to Manila and return and the sum of ten pesos, Philippine cur- 
rency, a day for the period during which he is engaged in the supreme court, the 
period to be calculated from the time he leaves his usual place of residence until his 
return from Manila. 

Sec. 10. The civil governor of the Philippine Islands shall hereafter be known as 
the governor-general of the Philippine Islands. 

Section 11 is the same as section 7 in the printed bill. 

Sec. 11. That sections twenty-two, twenty-three, twenty-four, twenty-five, twenty- 
nine, thirty-one, thirty-six, thirty-seven, thirty-nine, fifty-three, and fifty-eight of 
the act of Congress approved July first, nineteen hundred and two, entitled "An act 
temporarily to provide for the administration of the affairs of civil government in 
the Philippine Islands, and for other purposes," being provisions of said act respect- 
ing mineral lands, are hereby amended by reducing all measurements therein, 
whether of distance, area, or value, to the metric system, to wit, feet to meters, 
acres to hectares, miles to kilometers, and also dollars to pesos, so that said sections 
as amended shall read as follows: 

' ' Sec. 22. That mining claims upon land containing veins or lodes of quartz or other 
rock in place-bearing gold, silver, cinnabar, lead, tin, copper, or other valuable 
deposits located after the passage of this act, whether located by one or more persons 
qualified to locate the same under the preceding section, shall be located in the fol- 
lowing manner and under the following conditions: Any person so qualified desiring 
to locate a mineral claim shall, subject to the provisions of this act with respect to 
land which may be used for mining, enter upon the same and locate a plat of 
ground measuriiig, where possible, but not exceeding three hundred meters in 
length by three hundred meters in breadth, in as nearly as possible a rectangular 
form ; that is to say, all angles shall be right angles, except in cases where a bound- 
ary line of a previously surveyed claim is adopted as common to both claims, but 
the lines need not necessarily be meridional. In defining the size of a mineral 
claim it shall be measured horizontally, irrespective of inequalities of the surface of 
the ground. 



' 86 STATEMENT OF HON. WILLIAM H. TAFT, SECEETAEY OF WAE. 

"Sec. 23. That a mineral claim shall be marked by two posts, placed as nearly as 
possible on the line of the ledge or vein, and the posts shall be numbered one and 
two, and the distance between posts numbered one and two shall not exceed three hun- 
dred meters, the line between posts numbered one and two to be known as the loca- 
tion line; and upon posts numbered one and two shall be written the name given to 
the mineral claim, the name of the locator, and the date of the location. Upon post 
numbered one there shall be written, in addition to the foregoing, 'Initial post,' the 
approximate compass bearing of post numbered two. and a statement of the number of 
meters lying to the right and to the left of the line from post numbered one to post 
numbered two, thus: 'Initial post. Direction of post numbered two, 
meters of this claim lie on the right and meters on the left of the line from number 
one to number two post.' All the particulars required to be put on number one 
and number two posts shall be furnished by the locator to the provincial secretary, 
or such other officer as by the Philippine government may be described as mining 
recorder, in writing, at the time the claim is recorded, and shall form a part of the 
record of such claim. 

" Sec. 24. That when a claim has been located the holder shall immediately mark 
the line between posts numbered one and two so that it can be distinctly seen. The 
locator shall also place a post at the point where he has found minerals in place, on 
which shall be written ' Discovery post:' Provided, That when the claim is surveyed 
the surveyor shall be guided by the records of the claim, the sketch plan on the 
back of the declaration made by the owner when the claim was recorded, posts num- 
bered one and two, and the notice on number one, the initial post. 

' ''Examples of various inodes of laying out claims. 

1. 2. 3. 



No. 2 post. 

-o — 



150 meters. 



Discovery ^ 
post. O 



150 m. 



-O — 

No. 1 post. 



No. 2 post. 

-o — 



100 m. 



200 m. 



O Discovery post. 



200 m. 



O — 

No. 1 post. 



No. 2 post. 

o 

75 m. 



Discovery post. O 



— o — 

No. 1 post. 



"Sec. 25. That it shall not be lawful to move number one post, but number two 
post may be moved by the deputy mineral surveyor when the distance between posts 
numbered one and two exceeds three hundred meters, in order to place number two 
post three hundred meters from number one post on the line of location. When the 
distance between posts numbered one a,nd two is less than three hundred meters the 
deputy mineral surveyor shall have no authority to extend the claim beyond num- 
ber two. 

" Sec. 29. That no mineral claim which at the date of its record is known by the 
locator to be less than a full-sized mineral claim shall be recorded without the word 
'fraction' being added to the name o fthe claim, and the application being accom- 
panied by an affidavit or solemn declaration made by the applicant or some pe.son 
on his behalf cognizant of the facts: That the legal posts and notices have been put 
up; that mineral has been found in place on the fractional claim proposed to be 
recorded; that the ground applied for is unoccupied by any other person. In the 
said declaration shall be set out the name of the applicant and the date of the loca- 
tion of the claim. The words written on the posts numbered one and two shall be 
set out in full, and as accurate a description as possible of the position of the claim 
given. A sketch plan shall be drawn by the applicant on the back of the declara- 
tion, showing as near as may be the position of the adjoining mineral claims and the 
shape and size, expressed in meters, of the claim or fraction desired to be recorded: 
Provided, That the failure on the part of the locator of a mineral claim to comply 
with any of the foregoing provisions of this section shall not be deemed to invalidate 



7/ 



STATEMENT OF HON. WILLIAM H. TAFT, SECRETAEY OF WAR. 87 

such location if, upon the facts, it shall appear that such locator has actually discov- 
ered mineral in place on said location and that there has been on his part a bona fide 
attempt to comply with the provisions of this act, and that the nonobservance of 
the formalities hereinbefore referred to is not of a character calculated to mislead 
other persons desiring to locate claims in the vicinity. 

"Sec. 31. That every person locating a mineral claim shall record the same with 
the provincial secretary, or such other officer as by the government of the Philippine 
Islands may be described as mining recorder of the district within which the same 
is situate, within thirty days after the location thereof. Such record shall be made 
in a book to be kept for the purpose in the office of the said provincial secretajy or 
such- other officer as by said government described as mining recorder, in which 
shall be inserted the name of the claim, the name of each locator, the locality of 
the mine, the direction of the location line, the length in meters, the date of location, 
and the date of the record. A claim which shall not have been recorded within the 
prescribed period shall be deemed to have been abandoned. 

"Sec. '36. That the United States Philippine Commission or its successors may 
m»ake regulations not in conflict with the provisions of this act, governing the loca- 
tion, manner of recording, and amount of work necessary to hold possession of a 
mining claim, subject to the following requirements: 

"On each claim located after the passage of this act, and until a patent has been 
issued therefor, not less than two hundred pesos' worth of labor shall be performed 
or improvements made during each year: Provided, That upon a failure to comply 
with these conditions the claim or mine upon which such failure occurred shall be 
open to relocation in the same manner as if no location of the same had ever been 
made, provided that the original locators, their heirs, assigns, or legal representa- 
tives have not resumed work upon the claim after failure and before such location. 
Upon the failure of any one of several coowners to contribute his proisortion of the 
expenditures required thereby, the coowners who have performed the labor or made 
the improvements may, at the expiration of the year, give such delinquent coowners 
personal notice in writing, or notice by publication in the newspaper published near- 
est the claim, and in two newspapers published at Manila, one in the English lan- 
guage and the other in the Spanish language, to be designated by the chief of the 
Philippine insular bureau of pubhc lands, for at least once a week for ninety days, 
and if, at the expiration of ninety days after such notice in writing or by publica- 
tion, such delinquent shall fail or refuse to contribute his proportion of the expendi- 
ture required by this section, his interest in the claim shall become the property of 
his coowners who have made the required expenditures. The period within which 
the work required to be done annually on all unpatented mineral claims shall com- 
mence on the first day of January succeeding the date of location of such claim. 

"Sec. 37. That a patent for any land claimed and located for valuable mineral 
deposits may be obtained in the following manner: Any person, association, or cor- 
poration authorized to locate a claim under this act, having claimt d and located a 
piece of land for such purposes, who has or have complied with the terms of this 
act, may file in the office of the provisional secretary, or such other officer as by the 
government of said islands may be described as mining recorder of the province 
wherein the land claimed is located, an application for a patent, under oath, showing- 
such compliance, together with a plat and field notes of the claim or claims in com- 
mon, made by or under the direction of the chief of the Philippine insular bureau of 
public lands, showing accurately the boundaries of the claim, which shall be dis- 
tinctly marked by monuments on the ground, and shall post a copy of such j)lat, 
together with a notice of such application for a patent, in a conspicuous place on the 
land embraced in such plat previous to the filing of the application for a patent, and 
shall file an affidavit of at least two persons that such notice has been duly posted, 
and shall file a copy of the notice in such office, and shall thereupon be entitled to a 
patent for the lands, in the manner following: The provincial secretary, or such 
other officer as by the Philippine government may be clescribed as mining recorder, 
upon the filing of such application, plat, field notes, notices, and affidavits, shall pub- 
lish a notice that such an application has been made, once a week for the period of 
sixty days, in a newspaper to be by him designated as nearest to such claim, and in 
two newspapers puVjIished at Manila, one in the English language and one in the Span- 
ish language, to be designated by the chief of the Philippine insular bureau of public 
lands; and he shall also post such notice in his office for the same period. The claim- 
ant at the time of filing this application, or at any time thereafter within the sixty 
days of publication, shall file with the provincial secretary, or such other officer as by 
the Philippine government may be clescribed as mining recorder, a certificate of the 
chief of the Philippine insular bureau of public lands that one th,ousand pesos' worth 
of labor has been expended or improvements made upon the claim by himself or 



88 STATEMENT OF HON. WILLIAM H. TAFT, SECRETARY OF WAR. 

grantors; that the plat is correct, with such further description by such reference to 
natural objects or permanent monuments as shall identify the claim, and furnish an 
accurate description to be incorporated in the patent. At the expiratiori of the 
sixty dayg of publication the claimant shall file his afhdavit, showing that the plat 
and notice have been posted in a conspicuous place on the claim during such period 
of publication. If no adverse claim shall have been filed with the provincial secre- 
tary or such other ofiicer as by the government of said islands may be described as 
mining recorder at the expiration of the sixty days of publication, it shall be assumed 
that the applicant is entitled to a patent upon the payment to the provincial treas- 
urer or the collector of internal revenue of twenty-five pesos per hectare, and that no 
adverse claim exists; and thereafter no objection from third parties to the issuance 
of a patent shall be heard, excej^t it be shown that the applicant has failed to comply 
with the terms of this Act: Provided, That where the claimant for a patent is not a 
resident of or within the province wherein the land containing the vein, ledge, or 
deposit sought to be patented is located, the application for patent and the affidavits 
required to be made in this section by the claimant for such patent may be made by 
his, her, or its authorized agent where said agent is conversant with the facts sought 
to be established by said affidavits." 

"Sec. 39. That where an adverse claim is filed during the period of publication it 
shall be upon oath of the person or persons making the same, and shall show the 
nature, boundaries and extent of such adverse claim, and all proceedings, except the 
publication of notice and making and filing of the affidavits thereof, shall be stayed 
mitil the controversy shall have been settled or decided by a court of competent jur- 
isdiction or the adverse claim waived. It shall be the duty of the adverse claimant, 
within thirty days after filing his claim, to commence proceedings in a court of com- 
petent jurisdiction to determine the question of the right of possession and prosecute 
the same with reasonable diligence to final judgment, and a failure so to do shall be a 
waiver of his adverse claim. After such judgment shall have been rendered the party 
entitled to the possession of the claim, or any portion thereof, may, without giving 
further notice, file a certified copy of the judgment roll with the provincial secretary 
or such other officer as by the government of the Philippine Islands may be described 
as mining recorder, together with the certificate of the chief of the Philippine insular 
bureau of public lands, that the requisite amount of labor has been expended or 
improvements made thereon, and the description required in other cases, and shall 
pay to, the provincial treasurer or the collector of internal revenue of the province in 
which the claim is situated, as the case may be, twenty-five pesos per hectare for his 
claim, together with the proper fees, whereupon the whole proceedings and the 
judgment roll shall be certified by the provincial secretary or such other officer as 
by said government may be described as mining recorder to the secretary of the 
interior of the Philippine Islands, and a patent shall issue thereonfor the claim, or 
such portion thereof as the applicant shall appear, from the decision of the court, 
rightly to possess. The adverse claim may be verified by the oath of any duly 
authorized agent or attorney in fact of the adverse claimant cognizant of the facts 
stated; and the adverse claimant, if residing or at the time being beyond the limits 
of the province wherein the claim is situated, may make oath to the adverse claim 
before the clerk of any court of record, or any notary public of any province or mili- 
tary department of the Philippine Islands, or any other officer authorized to admin- 
ister oaths where the adverse claimant may then be. If it appears from the decision 
of the court that several parties are entitled to separate and different portions of the 
claim, each party may pay for his portion of the claim, with the proper fees, and file 
the certificate and description by the chief of the Philippine insular bureau of public 
lands, whereupon the provincial secretary or such other officer as by the government 
of said islands may be described as mining recorder shall certify the proceedings and 
judgment roll to "the secretary of the interior for the Philippine Islands, as in the 
preceding case, and patents shall issue to the several parties according to their 
respective rights. If, in any action brought pursuant to this section, title to the 
ground in controversy shall not be established by either party, the court shall so 
find, and judgment shall be entered accordingly. In such case costs shall not be 
allowed to either party, and the claimant shall not proceed in the office of the pro- 
vincial secretary or such other officer as by the government of said islands may be 
described as mining recorder or be entitled to a patent for the ground in controversy 
until he shall have perfected his title. Nothing herein contained shall be construed 
to prevent the alienation of a title conveyed by a patent for a mining claim to any 
person whatever." 

"Sec. 53. That every person above the age of twenty-one years who is a citizen of 
the United States or of the Philippine Islands, or who has acquired the right of a 
native of said islands under and by virtue of the treaty of Paris, or any association 



/^ 



STATEMENT OF HOIST. WILLIAM H. TAFT, SECEETAEY OF WAR. 89 

of persons severally qualified as above, shall, upon application to the proper provin- 
cial treasurer, have the right to enter any quality of vacant coal lands of said islands, 
not otherwise appropriated or reserved by competent authority, not exceeding sixty- 
four hectares to such individual person, or one hundred and twenty-eight hectares 
to such association, upon payment to the provincial treasurer or the collector of 
internal revenue, as the case may be, of not less than fifty pesos per hectare for such 
lands, where the same shall be situated more than twenty-five kilometers from any 
completed railroad or available harbor or navigable stream, and not less than one 
hundred pesos per hectare for such lands as shall be within twenty-five kilometers 
of such road, harbor, or stream: Provided, That such entries shall be taken in squares 
of sixteen or sixty-four hectares, in conformity with the rules and regulations gov- 
erning the public-land surveys of the said islands in plotting legal subdivisions." 

"Sec. 58. That whenever it shall be made to appear to the secretary of any province 
or the commander of any military department in the Philippine Islands that any 
lands within the province are saline in character, it shall be the duty of said provincial 
secretary or commander, under the regulations of the government of the Philippine 
Islands, to take testimony in reference to such lands, to ascertain their true character, 
and to report the same to the secretary of the interior for the Philippine Islands; 
and if upon such testimony the secretary of the interior shall find that such lands 
are saline and incapable of being purchased under any of the laws relative to the 
public domain, then and in such case said lands shall be offered for sale at the office 
of the provincial secretary, or such other officer as by the said government may be 
described as mining recorder of the province or depertment in which the same shall 
be situated, as the case may be, under such regulations as may be prescribed by said 
government and sold to the highest bidder for cash at a price of not less than six 
pesos per hectare; and in case such lands fail to sell when so offered, then the same 
shall be subject to private sale at such office, for cash, at a price not less than six 
pesos per hectare, in the same manner as other lands in the said islands are sold. All 
executive proclamations relating to the sales of public saline lands shall be published 
in only two newspapers, one printed in the English language and one in the Spanish 
language, at Manila, which shall be designated by said secretary of. the interior." 

Sec. 12. Section 8 of an act of Congress approved March 2, 1903, entitled "An act 
to establish a standard of value and to provide for a coinage system in the Philippine 
Islands," is hereby amended by striking out in the sixth line thereof the word "ten" 
and inserting the words therein "one thousand," so that the treasurer is authorized 
to receive deposits of standard silver coin and to issue silver certificates therefor in 
denominations of not less than two nor more than one thousand pesos under the con- 
ditions and restrictions of said section. 

I think there was some intimation by the committee that possibly 
1,000 pesos was too larg-e. 

Mr. Crumpacker. I would not think so. It is the only paper 
currency. 

Secretary Taft. It is not exactly the only paper currenc}'^. There 
is a bank in the Philippines, known as the Spanish-Filipino Bank, which 
is acting under a charter allowing it to issue bank notes, I think, in a 
sum not exceeding 3,000,000 pesos. 

The Chairman. Was the law question as to the power of the Com- 
mission to withdraw that charter ever settled? 

Secretary Taft. No, sir; but we have never had any doubt. 

The Chairman. You have never had any doubt of the power of the 
Commission to rescind it? 

Secretary Taft. Yes, sir. We have been fired at by briefs, but we 
have the whip hand, and we do not recognize it as a vested right. 

Mr. Crumpacker. That bank has a charter to issue bank notes in 
excess of its capital? 

Secretary Taft. Yes, sir; three times, I think. They are disposed 
to be reasonable about it. They are in this uncomfortable situation: 
Under their charter they have no right to issue bank bills except for 
what are called hard dollars and those are either Mexican or Spanish 
dollars. We have forbidden by law the circulation of either, and there- 
fore, if they would remain in business, they must have the privilege 



90 STATEMENT OF HON. WILLIAM H. TAFT, SEOEETARY OF WAR. 

of issuing notes in Philippine currencj^, so 1 do not think that Con- 
gress will be troubled by any question of that sort. I think that the 
settlement will ultimately come on the basis of their issuing a million 
pesos, which is their authorized capital. 

Mr. Crumpackee. Are there any American banks in the Philippines ? 

Secretar}'^ Taft. There have been two American banks, the Guaranty 
Trust Company, of New York, and the International Banking Compan3^ 
The Guaranty Trust Company has withdrawn now^, and the International 
Banking Companj^ is the on! 3^ American bank, except a so-called Ameri- 
can bank, which has no corporate rights, and is doing a little business 
on $30,000 capital. 

The Chairman. The International Banking Compan}^ has a large 
capital ? 

Secretary Taft. Yes, sir; I think it is $6,000,000. I do not know 
whether its capital has been increased to $10,000,000 or not. 

Mr. Williams. Why did the Guarant}^ Trust Company withdraw ? Is 
not that a good field ? 

Secretary Taft. No, sir; the Oriental banking is a system of skin- 
ning the coon "gwine and comin'." They say the original rule, until 
we changed it by legislation in Manila, was that if a man deposited 
gold they would turn it into "Mex." at once and credit him with a 
deposit of Mex." Then he would come in and say, "I need part of 
that money for a gold payment," and having charged him with the 
exchange for transferring from gold into "Mex." they would charge 
him again for the exchange back from "Mex." into gold. So if he 
onl}^ kept that up seven times a day he would not have any account 
left. The Hongkong Bank issues notes in Shanghai and discounts 
them in Hongkong and discounts them at Manila — its own notes. 
Altogether, Oriental banking is a profession that 1 think justifies suf- 
ficiently the ruling which has been asked, that there are no account- 
ants in the United States or anywhere else outside the ranks of the 
Oriental bankers that are skilled laborers within the meaning of the 
immigration laws. 

Mr. Crumpacker. American bankers can not adapt themselves to 
the conditions? 

Secretary Taft. They have not yet. They are sending out now 
some college graduates, whose talents are said to be very well devel- 
oped in that direction, to learn, and it is hoped that in the course of 
ten years we may get a corps of men who know how to run a bank in 
the Orient. They come into contact and competition with the China- 
man, who is no mean banker, as it is. 

Perhaps 1 did not explain as fully as 1 ought to have done the status 
of the present railway in the Philippine Islands. I do not know 
whether I told the committee that under the contract with Spain there 
was a government guaranty" of 8 per cent on $5,000,000 — that is, a 
government guaranty of income. The Attorney-General of the United 
States -was consulted as to whether that guaranty bound the United 
States, the law officer of the War Department having previously passed 
on the question and found that it did not. The Attorney-General 
found that it did not bind the United States Government, that it was 
a personal obligation of the Crown of Spain, but there might be some 
sort of equitable obligation on the part of some of the provinces 
through which the road ran, due to the improvement in the value of 



// 



STATEMENT OF HON. WILLIAM H. TAFT, SECRETARY OF WAE. 91 

land, but it was of such a vague and incalculable nature that it did not 
seem to be much of an obligation one wa^^ or the other. 

There was in the charter of the Manila railway a provision that at 
the end of one hundred }• ears the railway should revert to the Spanish 
Government. The government of the Philippine Islands has always 
repudiated, and so have the authorities of the United States, any obli- 
gation to meet the guarant}^ of the Spanish Government. The com- 
pany has claims against the United States, however, for the occupation 
of the railway. It took the railway and occupied it for nine months, 
and against the Government the companj^ had a claim. 

When I was out there as governor I talked with the manager of the 
company and suggested a compromise by which we should give them 
a perpetual franchise like the franchise already granted for the con- 
struction of railways without guuaranties, and that we should agree to 
allow them on the franchises already granted the duties on the material 
put into the new branches on the one hand, and that they should release 
all claims against the United States on the other hand. \ 

Mr. Olmsted. Is that road a pa^dng concern? -,■ 

Secretary Taft. Yes, sir; I think it is. v 

The Chairman. That is the railroad running from Manila to Dagu] >an ? 

Secretary Taft. Yes, sir. I think it pays $300,000 or $400,000 a 
year net. 

The Chairman. How many miles long is that railroad? 

Secretary Taft. They claim to have put into it 18,000,000, but tlie 
$8,000,000 or $9,000,000 put in were far more than need to have been 
put in to construct the railroad. It is 120 miles long. 

Mr. Jones. The guaranty was only on 15,000,000? 

Secretary Taft. 8 per cent on $5,000,000. Probably it could have 
been constructed for $5,000,000 if thej^ were not required to do many 
things necessary in a road of that character. The great cost is in 
iinding the foundations for bridges. 

They have to cross so many streams. In order to facilitate the 
terms which they are willing to make, Mr. Wayne McVeagh, who 
represents the company, has submitted to me a memorandum of a 
statement proposed by the present company by which the company 
agrees to convey all its interests to any American company which may 
receive franchises for other roads, either at a price to be agreed upon 
between them or by arbitration. The importance of the agreeinent is 
that the ownership of the road as it now is may interfere somewhat 
with the profits of an enterprise which might have in competition the 
line of the present Manila and Dagupan Railway. 

I should be glad to enter into such a contract, so that when the Com- 
mission comes to allowing the concessions to an^^ of the persons who 
may wish to take the concessions it may sa}^ to all of them, " Here, 
under this contract, is an opportunity to any of you to take over this 
line, and thus avoid the possibility of parallelism or interference with 
the profits of a railway that you may construct." I simply submit this 
memorandum with the other papers which I propose now to submit. I - 
ask, inasmuch as these are personal communications to me, thatthej^be 
not made a part of the record, except the memorandum of Mr. Mc-Vey. 

Thereupon the committee proceeded to the consideration o^i execu 
live business. / 




LIBRARY OF CONGRESS 

!! !!!!!!!!!! 9! !!1!! !!!!!!!!!! !!!!!!!!! !!!!! !!!!!!!!!!! 

92 STATEMENT OF HON. WILLIAM H. TAFT, 

[H. R. 14623, Fifty-eighth Congress, third ses 

In the Senate of the United States. April 15, 1904, read ...-?.,®2.1_7§1 . 297_ 5 

eii^r in lieu of S. 532S, and ordered to be printed. April 27 (28), 1904, amended in 
Coimnittee of the Whole; amendment by Mr. Foraker pending. December 7, 1904, 
orde^d reprinted as amended in Committee of the Whole and with the pending 
amenOTpent. 

[Omit the part in brackets and insert the part printed in italics.] 

AN ACT To^mend an act approved July first, nineteen hundred and two, entitled "An act temp^ 
rarily to pr%ide for the administration of the affairs of civil government in the Philippine Islanj 
and for oth^purposes," and to amend an act approved March eighth, nineteen hundred and t/ 
entitled " An\et temporarily to provide revenue for the Philippine Islands, and for other purpoal 
and to amend mn act approved March second, nineteen hundred and three, entitled "An act to 
establish a stanojard of value and to provide for a coinage system in the Philippine Islands/' arid 
to provide for thSimore efficient administration of civil government in the Philippine Islaii^s, and 
for other purposesjk 

Be it enacted by i^eSetmte and House of Representatives of the United States o^Amerka 
in Congress assemhla\^ThB.t all bonds issued by the government of the Pnilippine 
Islands, or by its autrllDrity, shall be exempt from taxation by the Governijnent of the 
United States, or by me government of the Philippine Islands or of any^political or 
munirdpal subdivision mereof, or by any State, or by any county, municipality, or 
other nunicipal subdivision of any State or Territory of the United S|^tes, or by the 
Distri<'t of Columbia, and\ll the provisions of this section are hereby n^tide applicable to 
Porto 'ico. [Amendment pending.] / 

Sec. ''. That for the purposive of providing funds to construct port/nd harbor works, 
bridge , roads, buildings for 'provincial and municipal schools,^court-houses, penal 
institucions, and other public Ni_mprovements for the development of the Philippine 
Islands by the general governnVent thereof, the said governm,ent is authorized from 
time to time to incur indebtedness, borrow money, and to is^aiie and sell therefor (at 
not less than par value in gold cimi of the United States) roistered or coupon bonds 
of sach denominations and payal^ at such time or times^iiot later than forty years 
after the date of the approval of this\"t) as may be determi^d by said government, with 
interest thereon not to exceed four aim one-half per centufin per annum : Provided, That 
the entire indebtedness of said goven\iient created by jtne authority conferred by this 
section shall not exceed at any one lime the sum of five million dollars: And pro- 
vided further, That the law of said govetoment creating the indebtedness and author- 
izing the issue of the bonds under this section sh^l be approved by the President of 
the United States. 

Sec. 3. That section sixty-six of the act of Congress approved July first, nineteen 
hundred and two, entitled "An act temporarily to provide for the administration of 
the affairs of civil government in the Philipiftne Islands, and for other purposes," is 
hereby amended to read as follows: / I 

' ' Sec. 66. That for the purpose of prowling; funds to construct sewers, to furnish 
adequate sewer and drainage facilities, to secure a sufficient supply of water, and to 
provide all kinds of municipal bettenpffents and improvements in municipalities, the 
government of the Philippine Island^^^ under suck limitations, terms, and conditions 
as it may prescribe, with the conse^'t and approval of the President of the United 
States, may authorize and enable,p5y appropriate le^slation, any municipality of said 
islands to incur indebtedness, b^-row money, and taissue and sell (at not less than 
par value in gold coin of the/TJnited States) regis%-ed or coupon bonds, in such 
amount and payable at such ^mie as may be determinVl by the government of said 
islands, with interest theroCn not to exceed five per (*ntum per annum: Prodded, 
That the entire indebtedness of an}' municipality shall %iot exceed five per centum 
of the assessed valuatioif' of the [property] real estate inlaid municipality, and any 
obligation in excess of^ch limit shall be null and void." ■ 

Seg. 4. That for th^ purpose of aiding in the constructii| 
and maintenance oJ4'ailroads, using steam, electricity, or 
pine Islands, the general government thereof is authorizec 

of not exceedina^'five per centum upon cash capital actually invested in the construc- 
tion and equinment of such railroads, or any part thereof, theVuaranty to be in such 
I'orm and uMer such provisions requiring repayment of any si^ paid thereunder as 
said ^ovenmient shall deem to be to the public interest, andUhe act making the 
guaranty; t^ftiall declare the proper rules for ascertaining clearly t^ cash capital actu- 
ally inv^tved in said railroads and the net income actually received on said capital so 
invesjied, at\d ^hall set forth the limit of invested capital to whSsjh said guaranty 
shajf apply, and shall provide for supervision by said government (\the conduct of 
tli,e finances <\:)t the road and its location, construction, and maintenanc*^ as well [as] 
i5y the preseiice in the board of directors of two or more government airectors, the 



equipment, operation, 
ler power, in the Philip- 
vto guarantee an income 



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021 781 297 5 



